Seek advice, don't shy away from facing equal pay issues
Kate Gardner, partner and head of Clarke Willmott’s Taunton-based employment team, advises regional firms to check their own records, following a recent High Court ruling on a backdated equal-pay claim.
Sometimes a legal judgement is handed down that changes things in a big way.
Last month the UK's Supreme Court issued a ruling that means that workers can bring equal-pay claims to the High Court as a breach of contract. Why does that matter? Because it means that claims can now be made that go back six years rather than six months, which is the current limit imposed by employment tribunals.
The case itself relates to 170 women who worked for Birmingham City Council and argued they had been paid less than their male counterparts. Having been cleared by the High Court to pursue their case, they are now expected to win it – and to cost the council a significant amount in compensation.
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So what will the ruling mean to employers and employees in Devon?
If you are an ex-employee of an organisation here, the obvious point to make is that it gives you a fresh opportunity to look into whether you've grounds for an equal-pay case, even if the potential claim itself is several years old.
To some that will doubtless look like a good opportunity to try to right a possible wrong, and with time on your side.
So far, so straightforward – and, most would argue, it's a good thing, since the right to be paid the same for doing the same work as someone else is what most of us would recognise as the basis of fairness.
For employers, however, this ruling opens up some big risks that every organisation, whether in the public or private sector, will need to understand and should probably address.
Equal pay laws may have been around for more than 40 years, but the statistics show that the gender pay gap is still around 15% today – that is, men get paid 15% more an average than women.
That may look at first glance like prejudice at work, but there are lots of varying reasons for this, not the least of which being that men, over the course of their working lives, are more likely to prioritise their work and feel in a position to negotiate terms.
For companies, though, this is a risky area. Many businesses will treat every salary negotiation as an individual case, with many variables dictating how the negotiation and the ultimate salary-and-benefits agreement pans out.
But the fact that many organisations approach things this way now is perhaps what needs to change. Introducing clearer pay scales and pay structures will not be an easy step for many organisations to take, but it is something that may be necessary for some if they want better clarity on their pay and to cut the risk of equal-pay disputes in the years ahead.
Pay scales have been around in the public sector for a long time, of course, though clearly that's not enough in itself since the case that's just changed things involves a council.
The principle, however, that an organisation might start to work harder at being transparent on its pay structures is a sound one, even if the process of going through a comprehensive pay audit is likely to be arduous.
Unfortunately the new ruling also throws up a potentially even messier problem for many organisations. If more transparent and demonstrably fairer pay structures are something that quick-acting businesses and public sector operations can soon put in place, what is to be done about the previous six years where, by implication, pay structures were probably less fair?
There is no easy answer here, as the extent of the issue will vary from organisation to organisation, but I would argue that many organisations' HR departments, with legal support if necessary, should also consider undertaking an historical audit of the past six years to see how exposed or not to equal-pay claims the organisation might be.
Depending on the outcome of that analysis, it might be necessary to start putting a pot of funds aside to deal with any potential disputes. And if it sounds daunting to know where what level of funding to set aside, it's probably wise to seek professional advice.
In Devon, one particular sector where there could be the potential for equal-pay claims to crop up in numbers is tourism and leisure, where seasonal workers are employed in huge numbers – and some employers may well have treated men and women differently. But for organisations active in that sector or any other, it's important to act now and to get the necessary advice on this issue, rather than ignore it and hope that it goes away. It almost certainly won't, and those that don't act could find they have a bigger problem on their hands further down the line.