Q&A: Discrimination and Equal Pay

What is your view of how discrimination law and equal pay law is developing?

At present the position is that the Government has been recognising to some extent the need for equality of pay, the idea of the gender pay gap and that getting women back in to work is good for both the economy and taxation.

On Brexit day, there will be a ‘freezing’ of all laws that currently reflect EU legislation. After the transition period, the UK government can start picking these laws apart. It becomes unclear what the Government will want to unpick in relation to equal pay or discrimination legislation.

Equal pay is unlikely to be touched straight away. However, there could be greater emphasis placed on working time legislation. There may also be a reduction in some of the financial remedies awardable for discrimination entitlements or entitlements to claim back pay. The current ‘look back’ time period for back pay is 6 years from the date the claim is finalised in England and Wales, reflective of EU legislation. This could be reduced to closer to 2 years.

What do you think employers should do about the recent #MeToo movement?

A lot of criticism aimed at individuals centred on the time taken for them to voice their concerns. On the backdrop of the #MeToo movement, a lot of people now may possibly be less reluctant to come forward and make a complaint. They will still be subject to the time limits imposed on bringing claims. However, tribunals may be willing to extend time on a just and equitable basis. It will be interesting to see the degree to which the tribunals will be happy to extend time on this basis.

Historic claims of sexual harassment that often present themselves in a grievance are likely to be dismissed unless individuals can demonstrate a continuing chain of conduct and three months have not passed since the last of those incidents. Even then, most tribunal judges look to impose a backstop date from which evidence will be heard.

Employers should not sit comfortably if employees seek to justify their actions against others under the guise of workforce ‘banter’. Banter cannot be one sided, nor can actions be deemed to be banter if the other person is laughing only because they fear that their job is at risk if they do not. Therefore, in the wake of the #MeToo movement, employers ought to consider the culture present in their organisation.

Employers should be reminded that a failure to make effective enquiries into acts of harassment in the workplace will in itself be an act of discrimination. When presented with sexual harassment claims, employers ought to make as detailed enquiries as they reasonably can.

What should employers do to minimise the risk of contingent claims brought by male workers?

The idea that a contingent or ‘piggyback’ claim (defined as when a woman (A) who performed ‘like work’ to a male comparator (B) has her contract varied, the male in A’s situation (C) could also bring a claim to get his contract varied) could be brought was likely unforeseen by legislators when the Equal Pay Act was enacted.

In the event that C’s pay is increased, further claims based on C’s uplift could be brought by workers performing ‘equivalent work’. This is called a ‘leapfrog’ claim.

Therefore employers should be careful to “look in the right place” when examining the pay of their workforce. Aside from ‘like work’ employers should be wary of ‘work rated as equivalent’ (under a job evaluation scheme “JES” in which workers are ‘graded’) and ‘work of equal value’ (as assessed by an independent expert).

Employers can also conduct their own JES. Once this is completed and provided it is fair, unbiased and uses fair factors that are not all tending to favour males or females, then even if a tribunal might have assessed things differently, it will likely accept the results.

The top tip is therefore to look in the right places and at the relevant jobs in the workforce to avoid a chain being created with claims from D, then E, then F. If a worker is getting 10% more than someone else, then begin to ask why? Is it due to qualifications, seniority, market value or is it just because historically men asked for more pay and it has remained that way ever since, despite there not being any differences in the work being performed?

Should these discrepancies exist, employers should seek to tackle any differences as soon as possible to limit their liabilities in relation to back pay. The best way to tackle the issue is by negotiation which could include changing what the men are earning, but this will be subject to potential breach of contract claims and complexities regarding pay protection.

It is clear that information is power – people need to know what others are paid. This was prevented in the past by employers imposing a pay secrecy clause in a contract of employment. Following the introduction of section 77 of the Equality Act and developments in that area, could or should employers use pay secrecy clauses, and are they lawful?

If an employee (E) who is subject to a pay secrecy clause goes out and starts telling everyone about how much he earns, that is a breach of the clause.

However, if E is asked how much he earns by F who wishes to scope out an equal pay claim, E does not have to tell F but it is not a breach of section 77 of the Equality Act if E does tell F, as this would constitute a ‘relevant pay disclosure’.

Provided the enquiry is for the purpose of establishing a breach of the Equality Act, the pay secrecy clause will be unenforceable, but not unlawful.

Therefore employers can use pay secrecy clauses, but ought to be wary that the clause will be unenforceable against a person who makes a legitimate enquiry for the purposes of establishing a discrimination claim. Public employers should be aware that freedom of information requests can also be used to obtain pay figures of co-workers.

Large companies are now under an obligation to monitor and report on their gender pay gap. Should smaller companies voluntarily report and to what extent might the gap be raised in grievance hearings and tribunal cases as an issue for smaller companies?

The gender pay gap regulations apply to large companies of 250 employees or more. The first round of reporting occurred in 2018 and second round figures are due to be published this year. These will make for more interesting reading as imbalances and lack of improvement against the 2018 figures can be scrutinised.

There is no sign that there will be a movement downwards to apply the regulations to smaller companies. Absent regulatory requirements, smaller companies might be advised not to volunteer this information as it could potentially give some information to those wishing to bring a claim. Furthermore, no adverse inferences can be drawn against a smaller company, which does not voluntarily report.

That said, all companies should do their own internal audit in order to see where the inequalities lie and to protect themselves against any future claims. There is a difference between conducting an internal audit and externally reporting on the pay gap.

The Government has recently provided guidance to help employers identify any potential causes of the gender pay gap in their companies and to develop effective strategies to reduce the gap. This guidance and action plan may prove useful for smaller companies conducting an internal audit to better understand and address any gender pay imbalances.

Ethnicity Pay Gap

Such an internal audit could also be a useful tool to examine more than just pay in relation to gender. The Government is likely to expand future reporting requirements to encompass ethnicity and disability pay gaps, having launched a consultation on ethnicity pay reporting in October 2018.

Companies wanting to conduct an internal audit should seek legal advice and thereby gain the protection of legal advice privilege.

(Note: Kindly note that nothing in this article constitutes legal advice and the article is provided for informational purposes only.)