Equal Pay

What is equal pay?

The concept of pay normally relates to some tangible benefit, whether expressed in financial terms or otherwise. It does not extend to non-economic loss (eg injury to feelings). It can include occupational pension schemes, severance payments, and one-off payments made by employers in recognition of special events.

The Equality Act 2010 (EqA) incorporates an equality clause into an employee’s contract, which applies equally for the benefit of women and men. Any term in an employment contract that seeks to exclude or limit any provision of the EqA is unenforceable.

When does equal pay apply?

Equal pay applies to employees and workers (engaged under a contract personally to execute work or labour) employed in Great Britain and are legally protected. Protection applies to both women and men and whatever their length of service.

An equality clause will be implied into an employment contract where an employee (or a worker) is employed doing equal work, which will be:

  • like work with a wo/man in the same employment (ie work that is the same or broadly similar in nature)
  • work rated as equivalent with that of a wo/man in the same employment (ie different but graded as equivalent under a job evaluation scheme)
  • work of equal value to that of a wo/man in the same employment (ie different but equal in terms of demands such as effort, skill and decision-making).

If one of the above conditions applies , the equality clause will modify a contract of employment to ensure that it is no less favourable than an employee of the opposite sex with a similar contract.

The equality clause does not allow an employer (or a worker) to claim they are entitled to be paid more than an employee of the opposite sex, as it only applies to less favourable terms.

Who is the permitted comparator for equal pay?

The comparator must be an actual fe/male and not a hypothetical fe/male. Both the employee (or the worker) and the fe/male comparator must be employed at the same time.

There must be a common employer (or an associated employer) and either a common workplace or, where the fe/male comparator is at a different workplace, common terms and conditions of employment, which means that the terms and conditions must be substantially comparable on a broad basis.

The employee (or the worker) can compare yourself with a fe/male comparator employed at the same time or either a fe/male predecessor or successor.

European law allows a comparator to be made between employees who do not work for the same employer but only where the differences in pay are attributable to a common source and where a single body is responsible for and capable or remedying.

What is like work?

In deciding whether or not the work an employee does and their comparator is the same or broadly similar there has to be a consideration of the type of work involved and the skill and knowledge required to do it.

The relevant test is to examine what the employee and their comparator do in practice. It is irrelevant that the nature of the work is defined differently in the employment contract or job description if there is no real difference in what the employee does in practice.

When considering like work a 2-stage test must be applied:

  • whether or not the work of the employee is the same or broadly similar to the work the comparator does
  • whether the differences between the work done by the employee are of any practical importance in relation to terms and conditions of employment. If the differences are insignificant, then an employee will be regarded as being employed on like work for the purposes of the EqA.

An employee must prove that you do the same work or work of a broadly similar nature. Conversely, an employer must show that the differences in terms and conditions of employment have practical importance.

What is work rated as equivalent?

Under the EqA, an employee will be regarded as being employed on work of equivalent value to their comparator if the employee’s job has been given equal value under a job evaluation scheme to their comparator.  The scheme is adequate if it is analytical and completed, it does not have to be acted upon by the employer.

For an employee to rely on a job evaluation scheme to make an equal pay claim, the scheme must be a valid one. A valid scheme is one that has been accepted as a valid scheme by the parties to it.

Under the EqA, an employee can also make an equal pay claim on the grounds that the work is rated as equivalent if an employee’s job would have been given equal value with that of a member of the opposite sex but for the fact that the job evaluation scheme was discriminatory.

What is work of equal value?

The key point about equal value is that jobs, which at first sight may be very different, can be of equal value when analysed in terms of the demands made on an employee.  The key is not to assume that jobs that are of different types (eg manual and administrative) cannot be of equal value.

Comparing jobs based on equal value means jobs that are entirely different in their nature can be used as the basis for an equal pay claim. Job comparisons can be made both within a particular pay or grading structure and between different structures or departments. Equal value is likely to be relevant where men and women are in the same employment but do different types of work.

An employee can only bring a claim for equal pay on the ground that the work is of equal value to their comparator provided that their chosen comparator is not employed on like work or work rated as equivalent.

An employee will also effectively be prevented from bringing an equal value claim where their work and that of their comparator have been given different values under a valid non-discriminatory job evaluation scheme.

An employee must demonstrate that they have reasonable grounds for claiming that their work is of equal value.   If an employer seeks to defend an employment tribunal claim, a tribunal will either commission an independent expert who will evaluate the jobs, and the tribunal will make a decision based on this.  Alternatively, a tribunal will determine whether the comparable jobs are of equal value without first obtaining a report where that decision is supported by a job evaluation study.

The parties are free to commission their own independent reports.

What is the difference between equal pay discrimination and sex discrimination?

If an employee receives less pay because of their sex, this will amount to direct sex discrimination and not equal pay.

What is an employer’s defence to an equal pay claim?

If an employee can establish that they have been paid less than a person of the opposite sex employed on like work, work rated as equivalent, or work of equal value, there is a presumption of discrimination.

Once there is a presumption of discrimination, an employer will have a defence to an equal pay claim if it can establish that the difference in pay is due to a genuine material factor other than sex.

The requirement of genuineness is satisfied if an employer’s purported reason is not a sham or a pretence (eg extra pay for long service or additional qualifications could be justified).

An employer’s explanation for a difference in pay will constitute a material factor if it is significant and causally relevant.

A difference in pay which is related to economic factors affecting the running of an employer’s business or factors related to administrative efficiency will be a material factor.

Even if an employer can establish a material factor to justify the difference in pay, the defence will not succeed if the material factor is influenced by discrimination.

What remedies are available for equal pay?

If an employee believes their employer has paid them less than a comparator of the opposite sex they can bring an employment tribunal claim.

Tribunals can award unlimited compensation for arrears of pay or damages. Normally an employee will not be entitled to be awarded any payment in respect of a time earlier than 6 years before the date on which the claim commenced. However, in certain circumstances the period can be longer.

How long do you have to bring an employment tribunal claim?

An employment tribunal claim under the EqA relating to equal pay must be received by a tribunal within 6 months (i.e. 6 months less 1 day) after the qualifying date. The time limit is a strict one and there is no discretion to extend time.

Calculating the correct qualifying date is not only necessary to ensure that an employment tribunal has jurisdiction to hear a claim, but can have significant consequences on the compensation recovered if they are successful.

The qualifying date is dependent on the type of case being pursued and there are 4 different types:

  • concealment case – this is where an employer deliberately concealed a qualifying fact
  • disability case – this is where an employee had a disability at the relevant time
  • stable employment case – this is where the claim relates to a period during which a stable employment relationship exists between an employee and an employer, which can include successive contracts. The time limit in this case is 6 months after the day on which the stable employment relationship ended
  • standard case – this is a case that does not fall within the definition of the 3 above.  The qualifying date is the date falling 6 months after the last day on which you were employed.

The time limit can be extended during Acas early conciliation, which must be started before the time limit has expired.

The material contained in this web page is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

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