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Equal Pay
 

Under law both men an women are entitled to equal pay. In addition to basic salary or wages pay is also deemed to include contractual benefits, such as pension contributions and bonuses. The Equal Pay Act is part of employment law and should be treated as separate from general discrimination law.

The Equal Pay Act 1970

Three important introductory points need to be made. First, there is a very strong European Union legal framework designed to prevent inequalities in pay on the ground of sex. Second, the Equal Pay Act relates only to sex discrimination. It does not deal with other grounds of discrimination in pay, for example race. Third, there is a clear distinction between the coverage of the Sex Discrimination Act and the Equal Pay Act .

The Equal Pay Act 1970 operates by inserting an equality clause into the contract of employment etc: 'If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include……an equality clause they shall be deemed to include one'.

What is an equality clause?

An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract……and has the effect that…...

  • any term excluded is treated as included,
    • and
  • any term which is less favourable is 'modified as not to be less favourable'

Employment

The claimant must be “employed” and must establish a comparison with a person in the “same employment”. This means that they must be employed by the same or associated employer either at the same establishment or at some other establishment where common terms apply. Employment is defined more widely than the contract of employment, as in the SDA. Companies are associated where one has control of the other or both are under the control of a third person.

Comparison

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

  • Like Work
  • Equally-Rated Work
  • Equal Value Work

Like Work

Here the complainant alleges that the work she is doing is the same as or broadly similar to that done by a male comparator. Any differences must not be of practical importance, that is, must not be such as to justify a pay difference.

Equally-Rated Work

This is where the work is different but is equally-weighted under an analytical job evaluation scheme (or would be if the scheme was not discriminatory). An unequal rating produced by an analytical, non-discriminatory job evaluation scheme in effect gives an employer a defence under the Equal Pay Act.

Equal Value Work

This is where the work is different and it is not shown to be equally-rated (s1 (2)(c)). An employment tribunal may require a report from an independent job evaluation expert to help them decide the matter.

Insertion of equality clause into contract

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

The Employer’s 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.

The European Union legal framework

The principle of equal pay

Article 141 of the Treaty of Rome 1957, which set up the European Economic Community (now the wider European Union) establishes the principle of ‘equal pay for equal work’. This means that there must be no sex discrimination in pay where the work is the same or of equal value. Treaties of the EU are its legal basis.

Remedies

Application is to be made to an employment tribunal while still employed or within 6 months of termination but there is some flexibility, for example, where the employer deliberately concealed relevant facts from the complainant.

A questionnaire procedure similar to the SDA may be used.

Please note that for equal value claims there is a separate procedure before employment tribunals, involving the use of an independent expert. The expert carries out a job evaluation exercise. Whether to use an expert is decided by the tribunal.

Remedy: arrears or damages for a period of up to 6 years (5 years in Scotland). This is measured backwards from the date of the application. Damages for injury to feelings are not payable: (City of Newcastle upon Tyne v Allan.)

An employee may obtain compensation under the SDA from a trades union where it has been party to pay discrimination. In Allen v GMB it was found that the union’s actions in relation to back-pay settlements of past pay discrimination amounted to indirect sex discrimination under SDA.

Summary: The general scheme of the Equal Pay Act 1970

  • Is the woman employed?
  • Is she in the 'same employment' as her comparator?
  • Is she employed on like work, work rated as equivalent, or work of equal value?
  • If yes to all the above, the equality clause applies
  • Does the employer have a material factor defence?
  • If yes, that stops the equality clause operating
    
 

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