Men and women are entitled to equal pay & benefits for ‘like work’, work rated as ‘equivalent’ or of ‘equal value’.
There are some exceptional circumstances where a difference in pay between the sexes can be justified, but these are normally limited to new employees who have less experience, and are hence less productive than existing employees. However, experience related pay differentials should last no more than the time it takes for an employee to become ‘fully competent’ in their role, and in any case no longer than 5 years.
It is possible that in the future all employers (rather than just public sector employers) may have to publish equal pay audits. In the meantime it is important for employers to ensure that people doing like, equivalent or equal value work are paid the same & receive the same benefits. Any exceptions to this rule have to be shown to be attributable to a material reason untainted by sex discrimination, or if sex discrimination is established, that the difference in pay is shown to represent a proportionate means of achieving a legitimate aim, and is therefore justified.
Under new legislation a tribunal can order an employer to conduct an equal pay audit where that employer has been found to have breached the right to equal pay or discriminated on grounds of sex relating to pay. Without a clear and objective process for establishing pay rates, issues can arise and it can make it difficult to spot potential pay inequalities. Equal pay claims can highlight potential claims to other employees. An equal pay audit could increase that risk further because the results of the audit would be published. Furthermore it is expected by March 2016 that compulsory publication of gender pay figures will come into force for medium-large employers (250+ employees) therefore it is advisable even for smaller business to regularly review bands of pay.
You will guess from the complexity of our language that equal pay cases are complicated and costly, with a significant part of the employment tribunal workload dedicated to this area.
Typical employment law pitfalls
Employees talk about what they earn, and differentials in pay will become apparent more quickly than employer’s might think. Women statistically have more time away from work (due to childbirth and care) and may have fewer opportunities for annual pay rises. Employer’s sometimes wrongly assume that the fact that a man has been employed longer than a woman justifies his higher pay – it doesn’t – the acid test is whether the work done by the man and woman is ‘like’, ‘equivalent’, or ‘equal value’.
Another common pitfall concerns the employment of employees covered by TUPE regulations. If an employee transferred into the business earns more than other employees doing like, equivalent or equal value work, the pay of that employee cannot be reduced, as this would be a breach of TUPE. It may however be the basis of a material factor defense for a period of time, allowing the employer to justify why the employee concerned earns more than others, i.e. because of TUPE.
Help and support
We can work with employers to help identify and rectify potential equal pay issues. If an employer becomes aware of an equal pay issue or complaint, they should contact us straight away.
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