The Equality Bill and equal pay
Caroline Underhill explains that, should the Bill become law, it will make little difference to the confusion over equal pay
When the government announced its intention to introduce a law to simplify current discrimination legislation, the equal pay provisions should have been at the top of its list.
Unfortunately, the changes it has proposed will do little to help claimants who want to pursue a case as, in essence, the Bill maintains the current provisions which are complex and difficult to understand.
Direct discrimination: Clause 66
One of the reasons for this complexity is the requirement for claimants to identify a comparator who works for the same employer at the same establishment or on common terms and conditions. This requirement has historically led to endless legal arguments in tribunals about what constitutes an “establishment” and what are “common terms and conditions”. This has not been changed.
There is, however, one new provision in the Bill which proposes that workers should be able to use sex discrimination law (as opposed to equal pay law) to claim equal pay.
The new provision can only be used if the following conditions are met:
• the reason for the lower pay is direct sex discrimination
• the usual route of equal pay cannot be used
• the reason that the usual route cannot be used is something other than the justification that the employer put forward for the difference in pay
This should help claimants because the sex discrimination provisions do not require an actual contemporaneous comparator. Tribunals would therefore be able to infer discrimination from the available evidence, even if there was no comparator. For instance, if a tribunal found that the employer recruited women generally on lower rates than men, it could infer direct discrimination on the basis of that evidence alone.
The three “gateways” to an equal pay claim also stay the same. These are: work that is broadly similar; work rated as equal by a valid job evaluation scheme in which the scoring system does not indirectly discriminate on gender grounds and is suitable to be relied on; work that is of equal value when analysed according to factors that measure the demands of, say, skill, effort and decision making.
Defence of material factor: Clause 64
The genuine material factor defence in the Equal Pay Act 1970 has been renamed and is now called “defence of material factor”. Although the word “genuine” has disappeared, employers still have to show that the difference in pay is due to a material factor that is not a difference of sex. So it will still have to be genuine and not a sham.
The material factor must also be a difference between the woman’s case and the man’s. This represents a slight change in wording in the Bill from the original legislation which said that, in like work and work rated as equal cases, it must be a difference but in equal value cases it may be a difference between the man’s case and the woman’s case. In practice, this was never particularly important.
Take as an example a situation where an employer could obtain productivity improvements from both the man’s job and the woman’s job, that employer could not then point to a material factor of productivity as the reason for the man receiving a bonus that had not been paid to the woman.
The main change that the Bill has introduced is an express clause allowing employers to defend a difference in pay by either showing that the difference is for a reason other than the person’s sex or, where there is indirect sex discrimination, that the reason for the pay difference is a proportionate means of achieving a legitimate aim.
Achieving future pay equality is also expressly stated to be a legitimate aim in the Bill. But what is proportionate? The new wording is an attempt to reflect the complex and sometimes almost incomprehensible case law. That case law is still under challenge. The complexities of this aspect of equal pay law remain.
Pensions: Clauses 62, 63 and 127
The Bill now reflects the law created by a case known as the Preston litigation under Article 141 of the Treaty of Rome. This gives rights of access to pension schemes that excluded part-time workers. The Bill requires occupational pension schemes to have a “sex equality rule” read into their terms if there is no express provision.
This states that men and woman have to be treated equally to comparable members of the opposite sex in relation to the terms on which they can join the scheme and the terms that apply once they become members.
Under the Bill, employment tribunals have jurisdiction to hear complaints about breaches of the gender equality rule under domestic legislation and Article 141 of the Treaty of Rome. Trustees will also be able to apply to a tribunal to determine their obligations under the scheme. Employers will have the right to be named as a party in such proceedings and make representations.
Maternity equality clause: Clauses 67 to 71
The Bill reflects case law and European law in relation to maternity pay by introducing the concept of a “maternity equality clause”. This acts in much the same way as the “sex equality clause” in that it modifies the woman’s contract so that her maternity related pay is increased in line with any actual increase in pay, or any increase that she would have been paid had she not been on maternity leave.
As a result, women on maternity leave must receive any increases in pay due to them at the time they would have received them, had they not been on leave and their pay, when they return, must reflect the increases they would have had, had they not been absent.
Occupational pension schemes are also deemed to have a maternity equality rule if they do not expressly contain one. This operates so that the scheme treats time when the woman is on maternity leave in the same way as time when she is not. This relates to membership of the scheme, accrual of scheme rights and also the determination of benefits that are payable to her.
This brings the disparate provisions on maternity leave and pensions into one place.
Gagging clause: Clause 72
The Bill introduces new protection for employees who talk about their pay. The aim is to prevent employers covering up unequal pay by penalizing employees who tell each other what they are paid.
Under the Bill, employers will not be able to enforce contract terms that try to stop employees from discussing pay terms with their colleagues. The provisions cover requests for information about a colleague’s pay terms as well as receipt of information from colleagues about their pay.
Discussions about pay in the context of discrimination on gender grounds or any of the other protected characteristics (race, disability, sexual orientation, religion and so on) will be treated as a protected act for the purposes of a victimisation claim. This brings new protection against detrimental treatment such as disciplinary action or dismissal as a result of discussions between colleagues about pay terms but only in these specific circumstances.
Gender pay gap information: Clause 73
The Bill gives the power for statutory regulations to be made to require particular employers to publish data relating to men and women’s pay for the purposes of establishing the existence or extent of any gender pay gap, once every 12 months. The power only covers employers who employ more than 250 people. Failure to comply could create criminal liability and a fine.
Gender pay gaps are an indicator of pay inequality. We can only hope that this prods employers to take action to deal with the continuing and persistent difference in pay between men and women. It is that action rather than individual litigation even by large numbers that will make the biggest difference in the long run.
Modernising a law that has been more or less unchanged since 1970 (apart from the equal value provisions that were introduced in 1986 and increasing the remedy period from two years to six years in 2002) is clearly a “good thing” and was obviously much needed.
However, the provisions in the Bill fall badly short of what was needed and, in many ways, amount to an opportunity that has been squandered.