Selected cases reporting on equal pay claims
Equal pay is the right for men and women to be paid the same when doing the same, or equivalent, work. It has been an aspect of UK sex discrimination law for over 40 years, and the law is now incorporated into the Equality Act 2010. However, a significant pay difference between male and female employees still exists.
This factsheet offers a broad outline of equal pay law looking at the role of 'comparators', how claims are dealt with by employment tribunals and the employer's right to a ‘material factor’ defence. It also looks at the gender pay gap and the reporting requirements being introduced in the UK. Finally it suggests good employment practices.
The causes of inequalities in pay between men and women are complex and go beyond direct discrimination. For example, issues such as career choices, part time working and availability of bonuses, overtime and promotion, can have a causal effect. This is why it’s common sense and good management practice for employers to scrutinise their approaches to reward in a holistic way. Spotting unjustifiable differences in the earnings of male and female employees can help reveal underlying indirect discrimination which may otherwise go unnoticed and prevent employers making the best use of female talent.
What is equal pay?
Equal pay is the right for men and women to be paid the same for the same, or equivalent, work or work of equal value. It’s an aspect of UK sex discrimination law which has been in force for over 40 years. Where men and women are not receiving equal pay, the employer must prove that the reason isn’t gender-related.
The gender pay gap is not the same as pay discrimination or equal pay. The gender pay gap is calculated by taking all employees in an organisation and comparing the average pay between men and women. Equal pay rules outlaw pay differences in men and women’s pay for same or similar work. It’s possible for an employer that treats its women fairly in terms of pay to have a large gender pay gap, and for an organisation that treats its female workers unfairly to have a small gap.
There’s still a significant gender gap in pay in the UK as shown by official statistics. The reasons are many and complex, and include historical notions about men being the ‘breadwinner’ in a family, higher value being accorded to jobs requiring traditionally ‘male’ qualities, the concentration of women in certain job roles, the concentration of women in part-time roles, childcare requirements, and women missing out on promotion opportunities due to maternity leave. Read our report Closing the gender pay gap: how can we speed up progress?
The legal position on equal pay
The law on equal pay in the UK, first introduced by the Equal Pay Act 1970, is now part of the Equality Act 2010.
The law gives a woman the right to be paid the same as a man (and vice-versa) for
like work- two employees who are doing the same or broadly similar roles, or
work rated as equivalent by analytical job evaluation study - could be totally different jobs which have been given the same rating as the result of an analytical job evaluation, or
work of equal value - when there are two jobs that are very different, but the employee claims that they require a similar level of skill and ability. For example, a female cook comparing her work to that of painters, insulation engineers and joiners who work for the same organisation.
The right to make a claim under equal pay legislation applies to employees, and also to anyone with a contract to carry out any work personally.
The Equality Act 2010 also introduced legislation relating to pay secrecy clauses. It’s unlawful to prevent or restrict employees from discussing their pay. Any pay secrecy clauses in a contract of employment are unenforceable, and if an employee suffers any detriment from discussing their pay, this will be unlawful. This only applies to discussing pay within the organisation. An employer can require employees to keep their pay confidential from outside bodies, such as a competitor organisation.
The Equality and Human Rights Commission has published a range of guidance on all aspects of the Equality Act (see Useful contacts). CIPD members can find out more in our Equal pay law Q&As.
In the referendum on 23 June 2016 the UK voted to leave the EU. Our Brexit hub has more on what the implications might be for employment law.
Equal pay claims
Equal pay claims are usually dealt with by an employment tribunal. An employee may bring a claim up to six months after leaving employment. There have also been some successful equal pay claims in the civil courts, where the time limit for bringing a claim is six years. Historically, employees have used an equal pay questionnaire to obtain information for their claim from employers. However, this has been replaced with non-statutory Acas guidance for employees to follow to find out whether they have received equality of terms in accordance with the Equality Act 2010.
The person bringing the claim must show that, on the face of it, he or she is being paid less than a person of the opposite gender doing the same work. The employer must then give a non-discriminatory reason for the difference in pay.
To bring an equal pay claim, the person bringing the claim must point to a ‘comparator’. A comparator is a person of the opposite gender, working for the same employer, doing like work (or work rated as equivalent, or work of equal value) who is paid more, or has more beneficial terms and conditions of employment, than the claimant.
The comparator can be someone working for the employer at the same time or in the past (a predecessor) but not someone employed afterwards (a successor). A comparator may even work for another employer as long as the inequality in pay is attributable to a single source (for example, in the public sector where there are employees doing similar work in several different locations). Under the Equality Act, if a woman cannot find an actual comparator, she may consider a direct sex discrimination claim relating to pay instead, in which case pay may be compared to a hypothetical male comparator.
The law doesn’t allow consideration of the equality of a contract of employment as a whole – so it’s not a defence to a claim to say that a lower hourly rate of pay is compensated by, for example, a better annual holiday entitlement. The contracts of employment of the claimant and the comparator must be compared clause by clause. The claimant can effectively ‘pick and choose’ the most beneficial provisions from their own and the comparator’s contracts.
The tribunal can order:
- a declaration of the claimant’s rights
- equalisation of their contractual terms for the future
- arrears of pay for up to six years (five years in Scotland)
- an equal pay audit.
To defend a claim, an employer must be able to show that:
- the person bringing the claim and the comparator (or hypothetical comparator) are not engaged in ‘like work’, or
- a bona fide and non-discriminatory job evaluation scheme has been conducted and the work is not ‘rated as equivalent’, or
- the work is not of ‘equal value’, or
- any difference in pay is due to a material factor, or difference other than the difference of gender.
There are special rules of employment tribunal procedure for dealing with claims for work of equal value. This might involve the tribunal appointing an independent expert to investigate and report back.
The Material Factor defence
The employer has a defence to an equal pay claim if it can show that, although men and women are being paid differently for the same or similar work, the reason is due to a ‘material factor’. This material factor must not itself contain any element of sex discrimination. A good example of a material factor would be a London Weighting allowance.
If there is a ‘material factor’ defence, it must not put one sex at a disproportionate disadvantage. If there is such a disadvantage, then the defence has to be objectively justifiable as a proportionate means of achieving a legitimate aim. For example, it could be a material factor if a man was more experienced than the woman. However, if the woman found it more difficult to gain the experience because of career breaks for childcare reasons, then the employer must show that it was justifiable to reward the additional experience by paying the man more.
Difficulties arise when the claim is for work of equal value between a woman and a man doing different jobs. Historical reasons for the different pay levels is not sufficient to establish the defence. However, an employer might be able to show the wage differences are a result of skill shortages, or for night rather than day work.
In areas such as local government and the NHS, there is often a long history of women working in comparatively poorly paid areas of work, whose jobs have subsequently been found to be of equal value to work done by more highly paid men. Similar claims have arisen in the private sector too, for example in supermarkets where male warehouse staff were being paid more than female staff working in the store. Where women have not been adequately compensated for unequal pay in the past, they may bring individual claims against employers for back pay.
What is gender pay gap reporting?
Gender pay gap reporting will be introduced in the UK on 6 April 2017 when the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 come into force. They require private and voluntary sector employers with 250 or more employees to publish results of their gender pay gap analysis on their website by 4 April 2018. This will include the:
- median gender pay gap figures
- mean gender pay gap figures
- gender pay gaps for any bonuses paid out during the year
- signed statement that the information is accurate.
The results must remain on the website for at least three years and the analysis results must be uploaded to the Government’s reporting website. Employers may choose to add explanatory comments to help the public and workers understand the results, especially if a significant gender pay gap is revealed.
In our podcast we discuss what the legislation is demanding of employers, the impact it could have on organisations and employees, as well as the practical considerations for HR professionals. Our Guide on gender pay gap reporting explores why the gender pay gap needs to be tackled, the detail of the regulations and how to calculate an organisation’s gender pay gap. It looks at the reporting requirements and how good communications will help to explain gender pay gap figures to the wider world. It also offers suggestions on closing the gap.
Gender pay gap reporting is different from an equal pay audit required by an employment tribunal if an employer is found guilty of pay discrimination. Such employers must carry out an equal pay audit unless an exception applies and the audit must be published on the employer’s website and be left there for three years. If an employer fails to comply the tribunal can impose a penalty of up to £5,000.
Good employment practices
UK employers must ensure their pay structures meet the requirements of the Equality Act 2010. The Equal pay code of practice recommends equal pay reviews, reports or audits as the most appropriate method of delivering a pay system free from gender bias. The Equality and Human Rights Commission provides an online toolkit for organisations with 50 or more employees to help them carry out an equal pay audit. Another EHRC guide helps small and medium sized organisations to carry out an equal pay review.
To ensure compliance with equal pay legislation across a business where there might be many different job types and pay structures, employers could set up a job evaluation scheme. However, great care should be taken to ensure that the scheme doesn’t contain in-built gender bias based on assumptions about the levels of skills etc, required for various jobs. Read our market pricing and job evaluation factsheet.
Alongside good practice, inequalities in pay between men and women can be addressed by:
- the wider availability of flexible working
- the elimination of discrimination against part-time workers
- building an awareness within the business of other barriers to the progress of women.
Useful contacts and further reading
RUBENSTEIN, M. (2016) Discrimination: a guide to the relevant case law. 29th ed. London: Michael Rubenstein Publishing.
WOMEN AND WORK COMMISSION (2009) Shaping a fairer future: a review of the recommendations of the Work and Women Commission three years on. London: The Commission.
Visit the CIPD Store to see all our priced publications currently in print.
CHARLTON, J. (2016) Gender pay gap: protect your firm's reputation. Employers' Law. May. pp14-15.
Closing the gender pay gap. (2017) IDS Employment Law Brief HR. No 1062, February. pp9- 17.
GILBERT, K. (2012) Promises and practices: job evaluation and equal pay forty years on! Industrial Relations Journal. Vol 43, No 2, March. pp137-151.
MARTIN, A. and PHILLIPS, A. (2016) How to get ready for gender pay gap reporting. Employers' Law. April. pp12-13.
MEVES, K. (2016) Why employers should carry out an equal pay audit. PM Daily. 8 November.
PITCHER, G. (2016) Financial services giants promise to link exec pay to female progression. PM Daily. 12 July.
WILD, S. (2015) Preparing for an audit. Employers’ Law. November. pp18-19.
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.
This factsheet was last updated by Lisa Ayling, solicitor and employment law specialist, and by Charles Cotton.
Charles Cotton: Performance and Reward Adviser
Charles directs the CIPD's performance and reward research agenda. He has recently led research into: how employers can help improve their employees’ understanding of their personal finances; how front line managers make and communicate reward decisions to their employees; how employers manage the risks around reward; how private sector employers can build the business case for workplace pensions; how employees form their attitudes to pay; and how the annual pay review process can become more strategic.
He is also responsible for the CIPD’s public policy reward work and has given evidence to select committees on banking pay, redundancy awards as well as responding to various consultations, such as on pensions, retirement and MPs’ expenses.
Explore our related content
Frequently asked questions on the legal issues relating to equal pay
Episode 73: This episode focuses on the impact of the voluntary initiative for encouraging transparency in equal pay – Think, Act, Report. Two years on from its implementation, how is it working out?
Episode 93: This episode addresses the contentious issue of CEO pay, the growing gap between average workers and the top executives in an organisation and what role the HR Director could and should be playing.