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law and the legal 500
Pay gaps: The issue of equal pay
It seems pretty simple that employees should be paid the same amount for doing the same work for the same employer, despite what gender they are. The Government's recent announcement of formal consultation into compulsory gender pay gap reporting has again drawn attention to the issue of equal pay, writes Alistair McArthur, the head of Herrington and Carmichael's employment team
Employers should be taking the opportunity to get their pay structures and pay scales right now, before this legislation comes into force
For over 40 years, the UK has had legislation (in the form of the Equal Pay Act 1970 and now the Equality Act 2010) preventing employers from paying a woman less than a man (or vice versa) for doing the same job. This being whether the man and woman are doing like work, work of an equal value or work rated as equivalent, and the employer does not have any material factor, other than sex, for justifying the difference in pay.
From experience, however, it is not always this simple. Complex pay structures, historical pay differences and employees who do potentially similar but not the same job, can all add difficulty for both employers and employees. This is in the context of assessing whether they are paying or being paid the right amounts, and there is no sex-related factor that would be the reason for this difference.
The Government’s announcement, in July 2015, of consultation should apply further pressure to employers to make sure that they get their pay structures and scales right. It is intended that the compulsory reporting will apply to employers with 250 or more employees and require them, essentially, to publish the difference in pay between the average pay of male and female employees. The original proposal to require gender pay gap reporting was enacted by the coalition Government before the election in May. The mechanics and detail of how this will operate is still to be determined through the consultation process
In April, the gender pay gap was reported as being 9.4%, although this figure varied from industry to industry, and according to the seniority of individuals within particular industries. The announcement of consultation brings with it a fanfare of suggested economic advantages of closing the pay gap. From an employee’s perspective, closing the pay gap, or the potential of closing the pay gap, should be good news. It would demonstrate that you are being paid the right amount for doing your job regardless of your gender.
But what does this mean for employers?
Employers should be taking the opportunity to get their pay structures and pay scales right now, before this legislation comes into force.
www.businessmag.co.uk THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2015
When pay gap reporting becomes compulsory, employers will want to ensure that they are publishing information that does not show, or tend to show, a difference in pay on the basis of gender. There is now, therefore a period where employers can take action to avoid an obligation to report unwanted news.
Where there is a difference in pay reported by the employer, this is likely to fuel further complaints, grievances or claims by employees attempting to reduce the difference in their pay. Over the years, there have been a number of high-profile claims pursued against employers. One of the most notable was pursued against Birmingham City Council by some 11,000 employees and resulted in the Council having to sell major assets to fund the settlement payments. However, it is not just public sector employees where this applies and, over recent months, we have seen several complaints by senior employees about the disparity in their pay. Any difference in pay reported by an employer will only serve to support an employee’s claims.
Of course, reporting on ‘average pay’ for particular roles will not just bring with it a risk of equal pay claims, but may also prompt questions more generally about how pay is determined, particularly from employees who are paid below ‘average’. In order to deal with this, employers will need to have clear and transparent pay structures to adequately explain any differences.
If you have any questions relating to the issues discussed in this article, contact me, details below.
Details: Alistair McArthur 0118-9774045
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