We need a new Equal Pay Act

It has been 45 years since Barbara Castle’s Equal Pay Act – and we still don’t have equal pay. So what would an updated act need to cover? Emily Thornberry explains.

by Emily Thornberry Published 7 March, 2015 – 20:00, New Statesman

1. It has been forty-five years since the Equal Pay Act, and yet whilst the gender pay gap is still nearly 10 per cent for full-time work and over 19 per cent for all employment, full time and part time combined1, the number of claims has fallen off by 70 per cent. The Equal Pay Act is no longer working and we need a new one which will make a renewed effort to tackle some of the underlining causes of pay inequality. This should be a priority for the next government, who should commit to getting rid of the pay gap within five years. Labour’s commitment to require employers with over 250 staff to publish pay audits is welcome, but not sufficient in itself to tackle this deep seated problem. Women in Britain have been waiting for long enough.

2. Clause 1 of the new Equal Pay Act should state that it is the responsibility of all of us to rid our system of gender inequality. Part of the current problem is that equal pay law is not based on collective responsibility, but rather on the notion that if you are not paid fairly it is up to you to do something about it for yourself. A woman needs to find a man doing work of equal value for the same employer (a comparator) and bring a case. We should not be depending on individual women to enforce a version of contract law to tackle inequality, we should be doing it together. There should be a number of special provisions within the Act that will focus the minds of all us. They should apply for five years with possibly a sunset clause.

3. We must all work for culture change and the legal system should provide us with new tools. There should be an obligation on employers to treat female and male employees equally by doing regular published pay audits and then eliminating unfair disparities.

4. We also need to overhaul the tribunals to give them wider powers with monitoring and enforcement and have judicial oversight of pre litigation settlements.

5. Individual applications to tribunals should not just be a means of getting individual redress, they should be treated as an alert to bad practice within an organisation and a call to action. When alerted, the tribunal should order pay audits and refer the organisation onto experts who can perform skills audits and job evaluation studies. This should be done under the auspices of the Equality and Human Rights Commission. The organisation’s plan as to how it will implement the recommendations of the studies should be monitored by the ECHR. Flagrant breaches of the recommendations could be referred back to the tribunal as a form of contempt of court. Furthermore, the tribunal should be able to order these remedies, not just after a full hearing, but also as part of a negotiated pre-litigation settlement. These are currently overseen by ACAS who could come to the tribunal with recommendations that such audits and studies be undertaken.

6. If any injustices come to light, compensation should be awarded to those who took the legal action and equal pay given in future to all those who have been discriminated against. In this way individual claims would not just help the individual woman, but can ensure that work is done on behalf of all the women in the organisation who are affected: ironing out injustices and ensuring culture change. At the moment any remedies have to be purely focussed on those bringing the claim.

7. It should be noted that the coalition government has introduced regulations that are supposed to require employers to carry out an equal pay audit for the rest of their workforce in the event that they lose an equal pay claim2. However, this is in practice little more than window dressing. Whilst the audit has to be published and include a plan on how to prevent breaches occurring or continuing there are no guidelines, binding or otherwise, on what constitutes an acceptable plan and the regulations are silent on enforcement or monitoring. What is more, the circumstances in which the tribunal may decide not to order an audit are numerous and broad – including where “the disadvantages of an audit would outweigh its benefits”. This is hardly radical stuff.

8. New Defences to Equal Pay Claims: If a company has regular equal pay and skills audits, and job evaluation studies done by accredited experts it should be presumed that they have an absolute defence, if they have adjusted the pay of the women according to the recommendations with no penalty during the five years since the passing of the Act. So whilst it would still be possible to take a claim, it would be very difficult to prove discrimination, furthermore the individual taking the claim would have to pay the usual court fees.

9. Gagging Clauses: It should not be acceptable that individuals are offered settlements where it looks like they have been bought off in exchange for a gagging clause. Gagging clauses in settlements should illegal, as they are in whistleblowing cases. Furthermore, settlements should be signed off by tribunals.

10. We should empower women and make it easier for them to take cases to tribunals by making the procedures quicker and more straight forward. When our current system was invented 45 years ago it was supposed to be simple, informal and fast. A woman was supposed to be able to represent herself. We have moved a long way from that and cases now take many years. The experience of taking a claim is more akin to a very stressful wade through treacle.

We need to update procedures to speed cases up and get rid of some of the more ridiculous loopholes that have arisen over the years.

Complex, multiple cases should be overseen by senior judges.

We must reintroduce a short form questionnaire that employers must complete which will help give women the information necessary to take a claim.

Women who are replaced by a man who is then paid more than her really ought to be able to rely on that as evidence of discrimination. We should amend The EA 2010 s.64(2)to clear up any confusion on this by stating that “a comparator could be a predecessor or a successor in the job”.

We should sweep away the defence that a difference in pay is a result of a “material factor”. This law seems to be that if a woman is paid differently to a man, but the employer does not mean to discriminate and the difference has arisen by accident or inertia that is a defence. Pay differences should be justified objectively3.

A new Equal Pay Act will also need to make it clear that a woman does not need to find a comparator who works for the same employer in the same building! We must sweep away this restriction which can be found in both the Equal Pay Act 1970 and the Equality Act4.

11. Compensation for failure to pay equally should be restricted once more to two years: one by-product of the old Equal Pay Act being so closely aligned with individual contract law has been that the European Court of Justice has stated that a breach of the Act should attract compensation in a similar way to breach of contract. The upshot of this is that instead of awarding compensation of two years back pay as the original Act envisaged, the ECJ has ordered that compensation must be awarded for six years. By raising the stakes in this way, the ECJ has not encouraged the ease by which cases can be settled and our ability to effect change has been hampered. Restricting compensation to two years would be a pragmatic change which would help to allay fears in the business community that this concerted attempt to affect culture change would be too costly. If challenged in the ECJ, the UK would need to explain that compensation is being restricted as part of a coherent progressive policy drive to ensure gender pay equality. The provision for two years back pay could also relapse to six years after a five-year period, helping to focus minds on the urgent need to deal with the problem.

12. Fees for Equal Pay Claims should be abolished for five years: As part of this change of emphasis, we will need to encourage women to come forward with their grievances, not just for their sake, but for the sake of others. Claimants will become closely akin to whistle-blowers under this new system. We should therefore waive tribunal fees during what we hope will be a period of change.

13. Settlements: Negotiation is always better than litigation and another way of driving through workforce change. However there have been recent cases where Trade Unions have been taken to court by their members for what were seen as unfair settlements. In order to inspire confidence in collective agreements, there should be Codes of Practice within the new Equal Pay Act and potentially guidance from ACAS.

14. Prevent outsourcing, agency-working and bogus self-employment being used to circumvent equal pay: The old Equal Pay Act never envisaged an employment market as we have today and only provides a very clunky response. Any new Equal Pay Act will need to be fit for the modern day. It must restore and strengthen guarantees on terms and conditions for public sector workers transferred to private sector; close loopholes in agency worker regulations; and create statutory rules against sham self-employment.

15. Pay Audits and s.78: Labour’s very welcome commitment to bring into force, for the private sector, the dormant power conferred in s78 EA 2010 to introduce regulations that require employers to publish information relating to the pay of male and female employees needs careful attention to the details in order to ensure this is more than a “modest” change5. There should be an obligation to act on any disparities brought to light by the audit. The restriction to businesses of more than 250 employees obviously leaves out most businesses. Furthermore the duty to reveal pay information can be interpreted as falling short of a proper pay audit, which compares pay across each stratum of equivalent work. For the information revealed to be useful, it should be published by reference to grade and job title, not just gender and should also include other forms of pay beyond salary, such as bonus payments.

16. What these suggestions don’t tackle! Occupational Segregation: One of the more entrenched causes of the pay gap between men and women is occupational segregation, with nearly two-thirds of women employed in 12 occupation groups, most of which are related to women’s traditional role in the family (these include caring, catering, cleaning, teaching, nursing, clerical work etc)6. It’s as though women have left the kitchen, but they haven’t got very far!

17. The law on equal pay focuses on individual comparisons within the same employment, which critics say is “intensely myopic” and means that “gender segregation goes largely untouched.”7 Under the EP 1970 the claimant had to identify a male co-worker doing equal work for the same employer at the same or equivalent establishment. In practice, this was often extremely difficult, as the union Unison explained in its submission to the bill committee of the EA 2010: “Part of the cause of unequal pay is the low value assigned to occupations with high concentrations of women (so we pay our plumbers more than child carers), so the absence of a male counterpart can prevent some women from making legitimate claims.”8

18. Hypothetical Comparators: Unison called instead for “the use of hypothetical comparators in discrimination cases where no actual comparator exists.” Hypothetical comparators, which are used in other kinds of discrimination law9 and are recognised by EU law10, are gleaned from evidence of examples that are similar enough to the claimant to allow a meaningful comparison to be made. The Equality Act 2010 did allow for the use of hypothetical comparators for cases of direct discrimination in equal pay cases – that is to say, really blatant discrimination where a worker is basically told that they would be paid more if they were male – but not indirect discrimination, where the conditions and practices of a workplace combine to put female staff at a disadvantage11. The exclusion of hypothetical comparators from indirect discrimination cases has led commentators to predict that “although there have been changes to the law on comparators, the effect that the new provisions will have on equal pay and the gender pay gap is likely to be restricted.”12 The legislation could be amended to make it clear that hypothetical comparators can be used for both direct and indirect pay discrimination claims.

19. Flexible working: We must not kid ourselves here though, the biggest obstacle to equal pay remains the fact that women continue to do the vast majority of unpaid work at home and until that changes, women will not have equality. In the meantime, and frankly even if it happens, we must continue to strengthen the law to allow flexible working so that people can balance their work and home lives. In many ways the rules have gone backwards under this government. Although the right has recently been extended to all employees regardless of dependents, it has in other respects been weakened. If a mum falls over and needs help in hospital and coming out again afterwards, a daughter simply cannot wait for her employer to consider a request for flexible working for three months as is their right. She is more likely to either leave, go part time or simply take a pay cut and demotion.

20. A new Equal Pay Act would not fix all aspects of gender inequality, but it would certainly be a step in the right direction. So let’s do it.

***

1 S1 (a) Sex Discrimination Act 1975

2Directive 2006/54/EC Articles 1 (c) and 2 (a)

3S71 Equality Act 2010

4Gow and Middlemiss at 173

5See Fredman at 196

6″Memorandum submitted by UNISON”, para 5.1

7S. Fredman, “Reforming equal pay laws”, Industrial Law Journal 2008 193 at 195

8Monaghan at 16.13

9Glasgow City Council and Others v Marshall and others [2000] I.C.R. 196: Lord Nicholls at 202 “if the employer proves the absence of sex discrimination he is not obliged to justify the pay disparity”

10 S 79 (3)(b) EA 2010

11The Equality Act 2010 (Equal Pay Audits) Regulations 2014

12Office of National Statistics: Annual Survey of Hours and Earnings, 2014 Provisional Results

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About Emily Thornberry

Emily Thornberry is MP for Islington South & Finsbury and shadow attorney general
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