businessman with empty pockets

The effects of equal pay legislation have recently hit the Higher Education sector, with 23 male workers (caretakers, tradesmen) at the University of Wales, Trinity St. David (Swansea) suing for sex discrimination, claiming they were paid less than women on the same pay grade (secretaries, office workers). The University has conceded the claims, with the projected settlement amount to total more than £500,000. This example serves to highlight the potential financial liability faced by employers who fail to level their employees’ contractual benefits.

Equal pay legislation came into force over 40 years ago. It is both a tenet of UK and EU law. The law operates by implying a ‘sex equality clause’ into a contract, so that less favourable terms are replaced by those more favourable terms existent in an equivalent colleague’s contract of the opposite sex. Claimants who feel discriminated against on equal pay grounds are entitled to pursue a claim for arrears of pay (going back 6 years) and damages for breach of a non-pay term. Declarations can also be ordered to equalise pay in the relevant organisation going forward.

Since 2005, over 200,000 equal pay claims have reached tribunal stage; the vast majority being in the public sector and principally involving councils. South Lanarkshire Council recently lost a lengthy legal battle against a class action brought by nearly 3,000 of its staff (mainly cooks, cleaners, dinner ladies), some of whom were getting paid just 50% when compared with male counterparts. This, Scotland’s biggest ever equal pay settlement, cost the Council £75m. Birmingham City Council workers agreed settlements totalling in excess of £1bn earlier this year.  The City Council is now finding ways to meet this liability, prompting it to consider selling ‘‘crown jewel assets’’ such as the NEC, the ICC and its shares in Birmingham Airport.

To protect their position, employers should seek to establish whether there are significant pay gaps by undertaking equal pay reviews. This would highlight whether any exist, and the potential liability, and may allow time for consideration as to the extent to which these can be objectively justified on factors other than sex. The recent case in Wales serves to highlight the risk of equal pay claims generally and serves as a timely reminder that there should be no complacency on the gravity of the cost of equal pay claims.

The university case reported is followed hot on the heels by a more traditional equal pay claim, that of women arguing they are engaged in work of equal value, namely shop workers from a large supermarket who are arguing their work is similar to those of workers in distribution centres, roles primarily undertaken by men. If successful, the cost to the supermarket retailer could total millions of pounds.

Matthew Kelly, Partner, Thomas Eggar LLP