Equal pay and the Equality Act 2010
The ‘equality of terms’ provisions in the Equality Act 2010 (the Act) entitle a woman doing equal work with a man in the same employment to equality in pay and other terms and conditions.
The Act implies a sex equality clause automatically into her contract of employment, ensuring that her contractual terms are no less favourable than his. The man with whom she is claiming equal pay is known as her comparator.
It is for the woman to select the man or men with whom she wishes to be compared. She can claim equal pay with more than one comparator (e.g. a woman working as a cook could claim equal pay with a male cook and with a male gardener). Her employer has no say in her choice of comparator(s), nor does the comparator have to give his consent to being named in her equal pay claim.
There are a number of ways in which a woman may be able to select a comparator. These include:
- using her own knowledge and experience of the work done by her male colleagues,
- seeking advice from her trade union representative.
- using information gained by going through her employer’s internal grievance procedure,
- using information obtained from her employer through using the statutory question and reply procedure.
- Applying to the employment tribunal for the discovery (or disclosure) of documents. Once a woman has filed her claim with a tribunal and has shown that her contractual terms are less favourable than those of male colleagues, she can apply for discovery to enable her to name the appropriate comparators.
The comparator can be:
- Someone with whom she is working at the present time, subject to the usual time limits.
- Her predecessor in the job, however long ago he did the job, although the comparison may be limited to what he was paid at the time of termination of his contract.
- Someone with whom she used to work in the same employment prior to a TUPE transfer to the current employer.
The woman can compare any term in her contract with the equivalent term in her comparator's contract. This means that each element of the pay package has to be considered separately and it is not sufficient to compare total pay. For example, a woman can claim equal pay with a male comparator who earns a higher rate of basic pay than she does, even though other elements of her pay package are more favourable than his.
If the woman’s equal pay claim is successful, the result will be that her pay is raised to the same level as that of her comparator. There will not be any reduction in his pay and benefits.
The equal pay (equality of terms) provisions in the Act apply to all employers irrespective of their size and whether they operate in the public or the private sectors.
The right of women and men to receive equal pay applies to:
- All employees, (including apprentices and those working from home) whether on full–time, part-time, casual or temporary contracts, regardless of length of service.
- Other workers (e.g. self employed) whose contracts require personal performance of the work.
- Employment carried out within Great Britain or where there is a sufficiently close link between the employment relationship and the UK.
A woman can claim equal pay with a man working:
- For the same employer at the same workplace.
- For the same employer but at a different workplace where common terms and conditions apply, for example at another branch of a store.
- For an associated employer; for example, at her employer's parent company.
- European law also allows a comparison to be made between employees who do not work for the same employer, but who are "in the same establishment or service", particularly where the differences in pay are attributable to a “common source” and there is a single body responsible for and capable of remedying the pay inequality. For example where pay differences arise from a sector-wide collective agreement or from legislation. This is an area of law on which specific legal advice should be sought.
The Equality Act equal pay provisions are called ‘equality of terms’ and cover all aspects of the contractual pay and benefits package, including:
- Basic pay
- Non-discretionary bonuses
- Overtime rates and allowances
- Performance related benefits
- Severance and redundancy pay
- Access to pension schemes
- Benefits under pension schemes
- Hours of work
- Company cars
- Sick pay
- Fringe benefits such as travel allowances
The European Court of Justice has held that pay systems that are not transparent are at high risk of being found to be discriminatory. Transparency means that pay and benefit systems should be capable of being understood by everyone (employers, employees and their trade unions). Employees should be able to understand how each element of their pay packet contributes to total earnings in a pay period. Where the pay structure is not transparent, and a woman is able to show some indication of sex discrimination, the burden of proof switches to the employer who then has to demonstrate that the pay system does not discriminate. It is advisable for an employer to keep records that will allow him or her to explain why he or she did something, showing clearly what factors he or she relied on at the time that the decision on pay was made.
The comparator may be doing the same job as the woman, or he may be doing a different job. She can claim equal pay for equal work with a comparator doing work that is:
- The same, or broadly similar (known as like work).
- Different, but which is rated under the same job evaluation scheme as equivalent to hers (known as work rated as equivalent).
- Different, but of equal value in terms of demands such as effort, skill and decision-making (known as work of equal value).
While the equal pay legislation does not compel an employer to use job evaluation, the concept of equal pay for work of equal value, whereby a woman can claim equal pay with a man doing a completely different job, means that an employer has to apply techniques akin to those used in job evaluation in order to properly assess the demands of the jobs being compared. An analytical job evaluation scheme evaluates jobs according to the demands made on the jobholders.
An employer can defend a claim for equal pay for work of equal value if a non-discriminatory analytical job evaluation scheme has rated the woman's job as lower in value than her male comparator's job (the job evaluation defence).
Where employers use analytical job evaluation schemes they need to check that the scheme has been designed and implemented in such a way that it does not discriminate on grounds of sex. An analytical evaluation discriminates on the grounds of sex where values have been attributed to the different demands against which it has measured the jobs, and these values cannot be justified irrespective of the sex of the person on whom these demands are made.
A job evaluation scheme will also be discriminatory if it fails to include, or properly take into account, a factor, or job demand, that is an important element in the woman’s job (e.g. caring demands in a job involving looking after elderly people), or if it gives an unjustifiably heavy weighting to factors that are more typical of the man’s job (e.g. the physical demands of being employed as a gardener).
A woman may also challenge a job evaluation scheme on the basis that instead of a factor, say, ‘mental concentration’ (in her job) being awarded fewer points than ‘physical effort’ (in her comparator’s job), it should have received the same or more points. Similarly, she may argue that ‘physical effort’ (in his job) has been overrated compared with the skill her job requires for ‘manual dexterity’. Even where she has received the same or more points than a man for a particular factor, she may still argue that the demands of her job under this factor have been underrated, that is, that the difference in points under the factor should have been bigger.
Employers also need to check the outcomes of the job evaluation for sex bias, and if the scheme is to remain free of sex bias it should be monitored.
Claims for equal pay are taken through employment tribunals. In like work and work rated as equivalent claims the procedure is the same as in any other employment case. There are special tribunal procedures for equal value claims.
Before making a complaint to the employment tribunal, a woman should try to resolve the issue of equal pay through the employer’s own grievance procedure. Although there is no legal requirement to do so it is good practice for the employer, the employee, and/or her union representative, to keep records of any meetings. Employers and employees can seek advice from an Acas conciliator. Acas can be contacted at www.acas.org.uk. For Armed Services personnel, there is a requirement to first make a complaint to an officer under the relevant service redress procedures and submit a complaint to the Defence Council under those procedures before presenting a claim to the employment tribunal.
A woman is entitled to write to her employer asking for information that will help her establish whether she is getting equal pay and if not, what the reasons for the pay difference are. There is a standard question and answer form that can be used for this purpose, which is available from the Government Equalities Office: - Equality Act 2010 forms for obtaining information
The form focuses on establishing whether the woman is receiving less favourable pay and other contractual terms than a colleague or colleagues of the opposite sex, and whether the employer agrees that she and her comparator are doing ‘equal work’. The woman can send this form to her employer either before she files her claim with the employment tribunal or within 21 days of doing so.
If the woman subsequently takes a case to the employment tribunal the information provided in her employer’s reply should enable her to present her claim in the most effective way and the proceedings should be simpler because the key facts will have been identified in advance. If her employer fails, without reasonable excuse, to reply within 8 weeks, or responds with an evasive or equivocal reply, the employment tribunal may take this into account at the hearing. The employment tribunal may then draw an inference unfavourable to the employer, for example, that the employer has no genuine reason for the difference in pay.
The principle of transparency does not mean that an individual has the automatic right to know what another individual earns. The principle of transparency means that a woman has the right to know how the calculations are made, not the content of the calculation. It is necessary to balance the ideal of transparency with the rights of individual privacy. The equal pay question form cannot require an employer to disclose confidential information, unless the employment tribunal orders the employer to do so. A woman can use the question form to request key information and it is likely that in many cases an employer will be able to answer detailed questions in general terms, while still preserving the anonymity and confidentiality of employees.
Much of the information requested will not be confidential but some information, such as the exact details of a comparator’s pay package, may be confidential to that person. Personal data is protected by the Data Protection Act 1998 and can only be disclosed in accordance with data protection principles. Pay records will usually be personal data covered by the Data Protection Act. Moreover, other issues such as ethnic origin and medical details are sensitive personal data to which particular safeguards apply. The disclosure of confidential information in the employment context is also protected by the implied duty of trust and confidence owed by an employer to an employee. For further details on these issues see the Commission’s guidance on Using the Data Protection Act and Freedom of Information Act in Employment Discrimination cases (Word).
Under the Trade Union and Labour Relations (Consolidation) Act 1992 an employer is under a duty to disclose to a recognised trade union, on request, information to enable constructive collective bargaining. Information about pay and terms and conditions of employment usually comes within the duty to disclose, but it is important to note that the duty applies only to information for collective bargaining.
It also represents good practice for employers who do not recognise trade unions to communicate regularly with their workforce, and where appropriate, their representatives.
As a general rule, a claim must be lodged with an employment tribunal within six months of the date of the end of the claimant's employment with the respondent.
This means that:
- If the claimant is still working for their employer - the time limit has not started to run,
- If the claimant no longer works for their employer - the six month time limit started running from the date that they left.
The time limit can be affected if any of the following apply:
- the claimant is suffering from an ‘incapacity’
- the employer has deliberately concealed the pay inequality
- the claimant has been engaged on a series of contracts
- there has been a fundamental change to the claimant’s contract of employment
- there has been a TUPE transfer
- the claimant is in the Armed Forces
- It is the claimant’s responsibility to ensure that she lodges her claim within the time limit and if necessary obtain advice on how it applies in her case.
The woman bringing an equal pay claim has to show the employment tribunal that on the face of it she is receiving less pay than a man in the same employment who is doing equal work. Her employer must then either accept her claim or prove to the employment tribunal that the difference in pay was for a genuine and material reason, which was not the difference of sex.
The fact that a woman is paid less than a man does not necessarily mean that she is suffering sex discrimination in pay. In making a decision about a case the employment tribunal has to assess the evidence about:
- The work done by the woman and her comparator
- The value placed on the work (sometimes with the advice of an Independent Expert), in terms of the demands of the jobs
- The pay of the woman and her comparator and how it is arrived at
- The reasons for the difference in pay
The possible defences for an employer against an equal pay claim are as follows:
- The woman and her chosen male comparator are not doing equal work
- The chosen comparator is not permissible – for example he is not in the same employment
- For equal value claims only - the jobs being done by the woman and the man have been evaluated and rated differently under an analytical job evaluation scheme that is free of sex bias. A non-analytical job evaluation scheme does not provide a defence to a claim
- The difference in pay is due to a material factor, which is not the difference of sex. In practice, an employer may identify more than one material factor. For example, an employer may argue that the man is paid more because he is better qualified than the woman and because it is difficult to recruit people with his particular skills.
If the woman succeeds in her claim she is entitled to:
- An order from the employment tribunal declaring her rights:
- Her pay, including any occupational pension rights, must be raised to that of her male comparator
- Any beneficial term in the man's contract but not in hers must be inserted into her contract
- Any term in her contract that is less favourable than the same term in the man's contract must be made as good as it is in his
- Equalisation of contractual terms for the future (if she is still in employment)
- Compensation consisting of arrears of pay (if the claim is about pay) and/or damages (if the complaint is about some other contractual term)
Back pay can be awarded up to a maximum of six years (five years in Scotland) from the date that proceedings were filed with an employment tribunal. In addition, the employment tribunal may award interest on the award of compensation. With up to six year’s worth of back pay being awarded, the interest element of any award is likely to be considerable. Compensation for injury to feelings is not available in equal pay/equality of terms cases.
If a woman thinks she is being discriminated against in respect of non-contractual or discretionary payments, or in relation to issues such as recruitment, training, promotion, dismissal and the allocation of benefits her claim will be made under the sex discrimination at work provisions of the Equality Act, rather than the equality of twerms or equal pay provisions.
The distinction between these types of claims is not always clear cut. Decisions about performance markings in a performance-related pay scheme are aspects of treatment which could be challenged as sex discrimination. By contrast, where those decisions result in different levels of pay, that difference and the terms of the scheme could be challenged under the equal pay provisions. If there is any doubt as to which provisions apply, legal advice should be sought. This is especially important because different time limits apply.
Claims for sex discrimination must be lodged within three months of the alleged act of discrimination, subject to the tribunal’s discretion to extend the time limit where it is just and equitable to do so. For Armed Services personnel the time limit is six months from the date of the act complained of if they have followed the appropriate procedures.
The Equality Act 2010 also protects employees from being victimised for making a complaint about equal pay or sex discrimination (unless it is both untrue and made in bad faith), or for giving evidence about such a complaint. Victimisation because a woman intends to bring a claim is also unlawful. The ‘complaint’ does not have to be by way of filing a claim with an employment tribunal, but includes any discussion or correspondence about the matter between the woman and her employer. The protection against victimisation includes not only the woman bringing the claim, but also anyone who assists her, for example, her comparator and any trade union or employee representatives.
Public authorities must have due regard to the need to eliminate unlawful discrimination, which includes includes discrimination in pay.
The general gender equality duty includes a requirement to have due regard to the need to eliminate discrimination that is unlawful under the Equal Pay Act (now replaced by the Equality Act 2010). The specific duties require listed public authorities, when setting their overall objectives, to 'consider the need to have objectives that address the causes of any differences between the pay of men and women that are related to their sex'.
These requirements, taken together with the specific duty to collect and make use of information on gender equality in the workforce and the duty to assess the impact of policies and practices, mean that listed public authorities have to undertake a process of determining whether their policies and practices are contributing to the gender pay gap. This should be done in consultation with employees and others, including trade unions.
The first step for a public authority considering the need for pay objectives should be to gather information to ascertain if there is a gender pay gap in its workforce. If there is, the authority should gather the information needed to identify the main cause or causes of that gap. These steps will enable it to give proper consideration to whether pay objectives are needed, and help it identify the causes those objectives may need to address. The size of the pay gap and the relative significance of each of the three causes will vary between different public authorities.
If a public authority fails to demonstrate that it has adequately collected and analysed information to establish whether or not there is a gender pay gap in its workforce, or fails to take action if there is a problem, it risks non-compliance with the duty, and subsequent enforcement action. Public authorities that do not set their own pay systems will still be expected to gather information and take appropriate action on any causes of the gender pay gap within their organisation which remain within their control.
Public authorities must be able to demonstrate that they have considered the need to have objectives that address the gender pay gap. For this reason, if a public authority does not include such objectives it should give reasons for that decision in its scheme. This might include providing evidence that there is no gender pay gap within its workforce, or within any wider group of women and men who are affected by its functions as an organisation, or that the alternative objectives which it has chosen have greater significance for gender equality. Public authorities should bear in mind, however, that pay discrimination is unlawful, and the general duty requires them to have due regard to the need to eliminate unlawful discrimination. For further guidance see the Gender Equality Duty Code of Practice 2006. (Word)
The statutory code of practice on equal pay recommends that the most effective way of establishing whether a public authority's pay policies and pay systems are discriminatory is to undertake an equal pay audit. The fundamental components of an equal pay audit are:
- Comparing the pay of women and men doing equal work. Here employers need to check for one or more of the following: like work, work rated as equivalent, work of equal value - these checks are the foundation of an equal pay review.
- Identifying any equal pay gaps, including by differences between part-time and full-time workers' pay.
- Eliminating those pay gaps that cannot satisfactorily be explained on grounds other than sex.
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Last Updated: 13 Mar 2014