Equal Pay Act 1970
This includes both pay and other contractual terms and conditions such as bonus payments, redundancy payments, holidays, private health and company car. A claim under the Equal Pay Act does not have to be made in comparison to a current employee; it can be made against a predecessor or successor in their job. While this Act applies to both men and women, it does not give anyone the right to claim equal pay with someone of the same sex.
An employee is entitled under this Act to write to their employer to ask for information to establish whether they receive equal pay compared to employees of the opposite sex, and if not what the reasons are for any discrepancy. If an employer receives an equal pay claim they need to show there is a genuine material factor, other than the difference in sex, for any pay differences.
The Equality Act 2010 and Equal Pay Legislation
The new Equality Act will come into force in October 2010. This will consolidate existing anti-discrimination legislation under one umbrella and will introduce measures for tackling inequalities to ensure Britain becomes a fairer society. It is envisaged that a single Act will be easier to interpret and apply.
Despite the Equal Pay Act having been in place for 40 years there is still considered to be a significant gender pay gap in the UK. The Office for National Statistics state that in 2009 the gender pay gap for all employees is 22%. The new Equality Act has looked at how to encourage employers to reduce this gap in pay.
“If an employer doesn’t look at their own gender pay gap, how do they address it? By understanding that they have a gender pay gap problem then can start to take steps to address it” Personnel Today, 26th January 2010, ‘Gender pay gap publication amnesty will not work’.
Therefore a key aspect of this Act is about producing reports on gender pay gaps in the workplace. A survey by Personnel Today have indicated that employers are unlikely to volunteer publishing differences in earnings between male and female staff for fear of damaging their reputation and their ability to attract recruits.
It is thought however that the only way to really challenge employers on differences in pay is to make this information more widely available and transparent. In line with this, The Equality Act will introduce the banning of any clauses in employee’s contracts that prevent them from discussing pay in order to encourage this transparency. It is also thought that by having employers carry out pay audits on their staff will encourage the necessary action to be taken.
Implication of the new Lib Dem/Conservative Government
The idea as to whether or not to make this audit reporting compulsory for the private sector has differed according to each political party.
The Liberal Democrat’s manifesto wanted employers to conduct compulsory equal pay audits and where there is a pay gap between men and women of more than 5%, action would have to be taken to narrow it.
However the Conservative party indicated they wanted to scrap plans for mandatory gender pay audits and only employers found guilty at a tribunal of gender discrimination should be forced to carry out pay reviews.
Under the recent policy plans published by the Coalition Government on Thursday 20th May 2010, it is stated that;
“We will promote equal pay and take a range of measures to end discrimination in the workplace.”
So while it has yet to be outlined how this will be implemented, The Equality Act allows for the possibility for equal pay audits to be made compulsory. Given the Conservative’s original stance, carrying out pay audits are likely to remain voluntary unless there is insufficient progress in reducing the pay gap, in which case employers with more than 250 employees may be forced to publish details about their gender pay gap from April 2013.
From April 2011, the Act will require public sector employers with 150 or more employees to report details of any pay gap on an annual basis. The Equality and Human Rights Commission have drafted a non-statutory guidance which includes a guide aimed at those relying on the law to protect their rights and a guide for those who have a responsibility under the law. These guides are due to be published in July 2010.
Why conduct an Equal Pay Audit
For those in the public sector, there is a statutory duty to publicise pay differences in gender. However private sector employers may consider carrying out a voluntary audit to establish if there is a gender pay gap in their workplace. By finding out this information they can start to put in place plans to reduce the pay gap between the two genders and remove any sex bias. This will help to avoid any claims which can either be made by an employee while at work or alternatively within 6 months of leaving that job.
Further Information and Advice
Further information and advice in respect of the Equality Act can be obtained from your HR Department. For NorthgateArinso clients, the HR Advice Line are available on 0845 299 0243 to help with any queries on this or any other HR related topic.
References:
The Equality Human Rights website,
“Conservatives set to scrap audits on gender pay gaps”, Personnel Today, 13th October 2009
“Liberal Democrat and fringe party employment policies”, Personnel Today, 13th April 2010, author Guy Sheppard.
“Reporting gender pay gaps”, IRS Employment Review, 5th March 2010, author Sarah Welfare.
The Office for National Statistics
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