Do you need to be worried about equal pay litigation?

September 19, 2023

By Nicole Brendel

As Birmingham City Council effectively declares bankruptcy after being hit by equal pay litigation costing millions – do you need to be worried about equal pay litigation?

What is equal pay?

The principle of equal pay is that male and female workers should be paid equal pay for equal work.

Equality of terms extends not just to pay but all contractual benefits, for example, sickness pay, pension contributions, overtime allowance, contractual bonus schemes, company car allowance and much more.

What is equal work?

It is important to remember that two jobs do not necessarily have to be the same to be covered by the principles of equal pay and equality of terms.

Equal work falls into 3 broad categories:

1. Like work – where the job and skills required are similar;
2. Work rated as equivalent – for example where there are different jobs but the effort required is similar; and
3. Work of an equal value – for example where there are different jobs but the level of responsibility / demand is similar.

A recent Supreme Court decision against ASDA declared that shop workers’ jobs were comparable to warehouse workers’ jobs and therefore the shop workers, predominantly female, were entitled to be paid the same as the warehouse workers, predominantly male. This shows the scope of how wide equal work may extend.

What’s the liability?

Whilst Birmingham Council are seemingly quoting huge figures incurred from previous equal pay litigation, it’s actually quite easy to rack up a significant liability where there are numerous workers who are not being paid equally. This is because the compensation awarded can extend to arrears of pay for up to 6 previous years.

It’s therefore easy to understand why other councils and large supermarket chains have also found themselves in trouble after group equal pay action was taken against them.

There’s no minimum length of service required to bring a claim and all ‘workers’ are protected by the legislation, including, for example, apprentices.

Can you ever justify unequal pay?

Pay cannot be differential purely because of the sex of the worker. If there is a valid reason other than sex for workers to be paid differently then it may be possible to justify differential pay. Qualification levels, skills shortages, the requirement to work night shifts, or geographical location are some examples of why it may be justified to pay jobs of a similar kind differential pay. Remember, however, that the reason must be genuine.

How to avoid litigation?

• Regularly and continually audit your workplace to ensure your workers are being paid a similar rate across the same or similar jobs;
• Be consistent with salary and benefits within job advertisements or salary reviews;
• Keep job descriptions up to date and reflective of the roles undertaken;
• Have an equal pay policy detailing the policy on pay, detailing how you will try to achieve equal pay and how you will deal with any complaints that arise about equal pay;
• Consider conducting job evaluations to assess roles in the workplace and keep records of such evaluations to assist in providing an answer for why different jobs are paid different rates.

If you require assistance with any of the above, please contact a member of our employment team, Nicole Brendel, on 02920 829 132 or nbrendel@darwingray.com for a free initial chat to see how we can help you.