The Equal Pay Challenge

The news that women working in Morrisons supermarkets are bringing an equal pay claim should serve as a warning to employers with unequal pay systems.

ASDA is already in the middle of an employment tribunal battle that is likely to drag on for years, and other supermarket chains could face similar claims, with women who work in the stores comparing their earnings with those of men who work in the warehouses.

Rise in claims

Lawyers who specialise in the field of equal pay, often acting on a no win no fee basis, are experiencing a rise in instructions, most likely due to two factors:

• The removal of employment tribunal fees which was a block to many justifiable claims for several years
• Gender pay gap reporting has made aggrieved employees think that it could be worth their while making claims, especially if their employer reports a big gap between men’s and women’s earnings

Which organisations are challenged the most?

Until now it has been mainly public sector employers, often local authorities, who have seen large group claims being made against them.

In 2012, Birmingham City Council were landed with a bank-busting £757 million award – they had to sell the National Exhibition Centre to foot the bill.

In January this year, Glasgow City Council lost their case after a strike of over 8,000 female staff, and it is estimated that they may have to fork out around £500 million. What will they have to sell off to settle the claims?

Now the lawyers are wooing private-sector workers with big adverts, and they are scrutinising pay systems which don’t stack up, as they might say in supermarkets.

So what causes the disparities?

There could be a range of reasons:

• Several conflicting pay scales where people are doing much the same job, or perhaps different jobs with the same demands and complexity, and are paid differently.
• Paying allowances to make sure staffing levels are good enough to provide a service e.g. shift, standby, attendance and market supplements, which are only paid to jobs mainly performed by men. One local authority would not remove such allowances because they feared an exodus of staff and would not contract out the street cleaning and refuse collection because ‘residents would not like the private contractors.’
• No upper limits to pay scales, often caused by performance-related pay. Paying more for good performance helps organisations create a culture of high performance, but sometimes the sky’s the limit.
• Allowances that don’t make sense. One organisation paid £8,000 per year for working at home to cover heating and lighting. It’s not likely that their staff were living in stately homes!
• Protecting pay for too long. After a job evaluation exercise, staff have their earnings fixed for several years so that they don’t lose out despite now being graded lower. Or after a TUPE transfer, it’s against the law to move staff onto less favourable terms & conditions, so they stay on their old pay levels until they leave the company, which may not be for decades. But others in the company are paid at lower levels, breeding discontent.

The last situation indicates a tension between what’s fair and within equal pay law, and what will avoid breach of contract under transfer of undertakings law. Employers tend to fear the latter more than the former, until someone decides to challenge the status quo. But the risks involved are not equal – no employer who changed an employee’s terms and conditions was ever slapped with a bill for half a billion pounds. You can make pay fairer with a big enough carrot and a bit of negotiation.

How do I face the equal pay challenge?

Getting to the bottom of the problem takes some analysis. A gender pay gap report may tell you that there are differences, but what causes them? A full equal pay audit will tell you much more.

Speak to a Croner Reward expert on 01455 858 132 to find out.