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Overview of Equal Pay

Posted on 22 May 2013

Overview of Equal Pay

The Equality Act 2010 implies a sex equality clause into every contract of employment which means that women and men in the same employment have a right to receive the same pay where they do equal work. If they don’t, they have the right to bring a legal claim.

Who is the comparator?

The comparator has to be someone of the opposite sex who is employed by the same or associated employer at the same workplace as the woman, or at a workplace where the terms and conditions are broadly similar.

Alternatively the woman can compare herself with someone who works for the same or an associated employer even if there are no common terms and conditions, as long as the employer who sets their pay acts as a “single source”.

She can also rely on a hypothetical comparator if she has evidence of direct sex discrimination and there is no actual comparator doing equal work.

What is“like work”?

The law says that a woman is employed on like work if she does the same, or broadly similar, work to that of her comparator and there are no differences of any practical importance between what they do.

In order to decide whether the work is broadly similar, tribunals focus on what the man and woman actually do in practice, and not what the job description says.

What is “work rated as equivalent”?

Alternatively, a woman can claim that she is employed on work which has been rated as equivalent to that of a man under a job evaluation study carried out by the employer.

This measures the demands made on the two workers under headings such as effort, skill and decision making. The job evaluation scheme must be free from discrimination and must be analytical.

What is “equal value”?

In an equal value claim, the tribunal has to decide whether the demands of the woman’s job and that of her comparator are such that they should be treated as being of equal value, even though they may do quite different jobs. 

The tribunal will assess an equal value claim in terms of the demands of the job such as effort, skill and decision making.

What defences are available to employers?

If a woman can show that she is engaged in “like work”, “work rated as equivalent”, or “work of equal value”, then the  onus shifts to the employer to prove that the difference in pay is due to a material factor (or more than one) that has nothing to do with the sex of the jobholders.   For example, an employer may argue that the man is paid more because he is better qualified than the woman and because it is difficult to recruit people with his particular skills.

If the employer can show that there is no direct or indirect discrimination, then the tribunal will accept their explanation for the difference, provided it is genuine and material. 

If on the other hand the woman can show that the difference was due to sex discrimination, then the employer has to objectively justify it, by showing that it corresponds to a real business need, is appropriate to meet that need and is necessary to that end.

What amounts to objective justification?

Employers have used the following arguments to objectively justify a difference in pay:

  • “red circling” (but only for a limited period of time)
  • market forces and skills shortages
  • geographical differences such as London weighting
  • different skill levels and qualifications as long as they are relevant to the job in question  - for instance in one case, the appeal tribunal said that a difference in pay at the recruitment stage could still act as a defence in subsequent years
  • length of service, where appropriate

Can employers impose pay secrecy clauses?

No, the Equality Act 2010 states that employers cannot stop employees from discussing differences in pay related to protected characteristics with one another.

It also prohibits employers from enforcing “gagging clauses” in people’s contracts, although they can stipulate that employees keep pay rates confidential from certain groups outside the workplaces.

What are compulsory gender pay audits?

The government has decided to introduce a power for employment tribunals to order compulsory gender pay audits when an employer has been found to have discriminated on the ground of sex. Micro-businesses (those with fewer than 10 employees) will be exempt. It is not yet clear when the power will become effective.  

Posted in: Employment Law for Employees, Employment