It has been announced today that the Government is to press ahead with plans to force larger companies (we believe this to be firms with more than 250 employees) to disclose data on the gender pay gap among staff.
It is believed by doing so it will place “pressure” on companies into boosting women’s wages with the vow to eliminate the gender pay gap “within a generation” on David Cameron’s radar.
In November last year, the Office for National Statistics figures suggested that the gender pay gap was at its narrowest since comparative records began in 1997. The difference was 9.4% in April compared with 10% a year earlier.
The Equal Pay Act 1970 was enacted at a time when it was not uncommon for employers to openly give different rates of pay to men and women performing the same job, or to reserve certain jobs for men and other (low-paid) jobs for women. Although such overt discrimination is hopefully less common these days, a significant gender pay gap nevertheless persists, and equal pay claims form a major part of the work of the employment tribunals.
What is the law on this issue?
The Equal Pay Act 1970 was introduced to ensure that women were not paid less than their male counterparts because of their sex.However, the principles apply equally in reverse and a man can bring an equal pay claim based on a comparison with a female colleague. The Equality Act 2010 repealed and replaced the Equal Pay Act from 1 October 2010.
The Equality Act 2010 implements the principle that men and women should receive equal pay for equal work, as set out in Article 157 of the Treaty on the Functioning of the European Union (TFEU), into the law of Great Britain.
What do we mean by Equal Work? Anyone employed under a contract personally to do work is entitled to contractual terms that are as favourable as those of a comparator in the “same employment” of the other gender, if they are employed on equal work (that is, like work, work rated as equivalent or work of equal value).
How is this achieved? The law achieves this by implying a “sex equality clause” into a woman’s contract of employment, which operates so as to replace her less favourable term(s) with the equivalent more favourable term(s) of a man’s contract. Each term of the contract must be considered separately for comparison purposes.
Material factor defence. The sex equality clause does not operate if the employer shows that the difference in contractual terms is due to a material factor which is neither directly nor indirectly sex discriminatory. A factor that is ostensibly gender-neutral but which, in practice, has a disproportionate adverse impact on women will need to be objectively justified by the employer.
Maternity and equal pay. There are also specific provisions aimed at protecting women’s pay during pregnancy and maternity leave. A woman who has taken maternity leave must not lose the benefit of any pay rise that she would otherwise have had, in calculating either her maternity pay or her pay on return to work. Furthermore, she must not lose out on any bonus that she would otherwise have received during her maternity leave, to the extent that it relates to the period before her maternity leave, any period of compulsory maternity leave, or the period after she returns to work. Again, these provisions operate by way of an implied equality clause to amend the woman’s contract, but there is no need in such cases for a male comparator to be identified. Under the Equality Act 2010 this is referred to as the “maternity equality clause”.
Equal pay claims are usually brought in an employment tribunal, which can make a declaration of the claimant’s rights and require payment of any arrears of pay or damages for breach of a non-pay term. However, in some circumstances a claim can be brought in the civil courts.
What is generally covered by equal pay law?
- Basic pay
- Automatic pay progression
- Paid holiday entitlement
- Sick pay
- Hours of work
- Performance-related pay and benefits, overtime rates and allowances
- Non-discretionary bonuses
- Contractual benefits in kind such as company cars
- Pension benefits and access to pension schemes
Outcome?
Only time will tell whether the consultation will impact on the gender pay gap.
Perhaps let’s see where we are this time next year?
For more information on this issue or any employment related query please do not hesitate to contact Caroline Acton or Marie Walsh on 0113 357 1315 or enquiries@consilialegal.co.uk