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The Pay Gap and the Private Sector - Expert Comments

Just Employment Law
22nd Sep 2010

Expert Comments on equal pay claims.

The Act will also remove the right of the employer to enforce secrecy clauses which prevent employees discussing their pay. This will allow workers to disclose salary details to anyone whose enquiry is based on establishing pay discrimination.

 

It remains to be seen whether the regulations contained in the 2010 Act, which would oblige private sector employers with 250 or more employees to report publicly on an annual basis on the difference in pay between male and female employees, will be introduced. If they are, employers who do not comply could face criminal and civil sanctions, including a fine of up to £5,000. It is widely thought that these obligations will be extended in due course.

 

It is recommended that businesses in the private sector take note of these developments. One of the reasons for this is that the EHRC has stated that those employers who comply with the voluntary monitoring scheme are less likely to be compelled to provide information to Equality and Human Rights Commission (EHRC) under its investigative powers. The EHRC acts on its own merits and its initiatives will continue to apply to private sector employers regardless of the fate of the Act's gender pay information provisions.

 

The guidance published by the EHRC should therefore not be dismissed by employers.

 

The EHRC estimates that it should take no more than half a day to review a 20-person business with five different jobs. Where differences are found to exist, the employer must be able to demonstrate that the differences are not related to the sex of the job holders and can be justified by an alternative reason. If this is not possible, action to rectify the problem must be taken immediately.

 

The key issue to remember is that when following the process the employer needs to be evaluating the jobs themselves, and not the job holders. The process should be relatively straightforward where jobs are very similar but employers may run into more difficulty where seemingly different jobs are in fact equal in value.

 

Difficulties may also arise where the reviewing of existing pay structures uncovers pay discrepancies that have existed over a long period of time. The risk could be considerable because not only will employers be required to equalise pay for the future, but disadvantaged employees will be able to claim up to six years' back pay. However, in the vast majority of small firms, there are likely to be very few cases of this.

 

In addition, a pay review could result in some employees having their pay actually reduced because the review uncovers a historic over-payment in relation to that job role. This is unlikely to be readily accepted by any group of employees who are affected by this. Pay protection offers a possible way around this but further advice should be sought if this issue arises.

 

The private sector is advised to learn from the experience of the public sector and take steps now to protect itself against a flood of equal pay claims. Any action taken by an employer in pursuance of the long-term objective of reducing inequality between the employment terms of men and women is seen by the Equality Act as a legitimate aim in the defence of an equal pay claim and the guidance published by the EHRC is a useful starting point.

 

Further guidance and Codes of Practice for Employers are likely to be released in October. Until then EHRC guidance is available here.

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