Equal Pay

What is the law regarding equal pay

The Equality Act 2010 (EqA 2010) decrees that men and women performing work of equal value should receive the same pay.

What is pay?

Pay refers to any part of the pay package, terms of employment and benefits, including:

  • basic pay
  • hours of work
  • annual leave entitlement
  • employee benefits
  • overtime rates and allowances
  • bonuses
  • performance-related benefits
  • sick pay
  • severance and redundancy pay
  • access to and benefits from pension schemes
  • company cars

Who can make an equal pay claim?

The right to be paid equal pay for equal work applies to:

  • anyone classed as employed – regardless of their level, contract type (full-time, part-time, casual or temporary) or how long they have worked there;
  • workers – this would include, for example, self-employed people whose contracts require them to carry out the work personally;
  • employment conducted in Britain, or where there is a close enough link between the employment and the UK.

Comparators

Someone who wants to bring an equal pay claim needs to pick another person to compare their work with (a comparator). Employers cannot veto the claimant’s choice of comparator when they make a claim. The comparator must be a real person and not hypothetical.

Comparison

The comparison must be on the basis of one of the following:

  • like work
  • work of equal value
  • rated as equivalent

Like work

Where the work being done is the same as, or broadly similar to, that done by a compatator of the opposite sex. Any differences must not be of practical importance; ie, not enough to justify a pay difference.

Of equal value

Where the work of each employee is broadly similar in terms of the demands made on them. Demand factors to be considered include elements such as skill, effort, responsibility level, knowledge and working conditions.

Rated as equivalent

Where a job evaluation rates two jobs as equivalent. The job evaluation must itself be non-discriminatory. An evaluation that, for example, placed less emphasis on traits generally associated with female roles could not be used to justify treating two different jobs as not equivalent. An analytical job-evaluation process to establish equivalent jobs and jobs of equal value should be used where possible.

Equality clauses

A person’s employment terms are treated under EqA 2010 as including a sex equality clause (if one is not already present). This ensures someone’s employment terms are comparable with those of someone of the opposite sex who is performing work of equal value. The equality clause relates to terms (whether concerned with pay or not) of a contract and has the effect that:

  • where a term is less favourable than a comparator’s, the claimant’s terms are modified to match the comparator’s;
  • if the comparator has a term which benefits them and the claimant doesn’t have it, the term will be inserted into the claimant’s contract.

Once one of the comparisons above has been established, an equality clause is inserted into the contract, but subject to the employer’s defence.

Defence

The employer’s defence is that the difference in pay is genuinely due to a ‘material factor’ which is something other than sex. Skills, training, valid experience, but also economic factors can be such a factor. Where a material factor is shown, the equality clause does not operate.

Time limits

Application must to be made to an employment tribunal while still employed, or within six months of termination. There is some flexibility however, for example, where the employer deliberately concealed the pay disparity from the complainant, where there has been a TUPE transfer or where the claimant has an incapacity.

Remedies

If an employment tribunal upholds the employee’s claim, it will make a declaration of their rights. The claimant can then:

  • have their pay (including terms and benefits, etc) increased to match that of their comparator;
  • require that future contractual terms be equalised;
  • receive damages if the claim is about terms;
  • claim back-dated pay (with interest if appropriate).

The employer will also have to carry out an equal pay audit, unless exemptions apply.