Equal Pay Law: Employers’ Guide

equal pay law

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Equality of pay remains an ongoing source of dispute and complaints in the workplace. Understanding the employment rights of their workforce, including the law on equal pay between men and women, forms an important part of an employer’s obligations.

The following guide for employers looks at what the law says about equal pay, in this way helping employers to comply with the relevant statutory provisions around pay practices and avoid falling foul of the law, as well as how equal pay complaints can be avoided.

 

Is there an Equal Pay Act?

Equal pay legislation was first introduced in the UK by way of the Equal Pay Act 1970 although, despite receiving royal assent in May 1970, the Act did not come into force until the same time as the Sex Discrimination Act in December 1975. Still, the Equal Pay Act represented a landmark moment in the fight for equal pay in the UK, finally outlawing pay discrimination on the basis of sex by prohibiting any less favourable treatment between men and women in terms of both pay and conditions of employment.

The Equal Pay Act provided a contract-based solution to the issue of unequal pay. As such, all employment contracts would be taken to include an equality clause, where this clause would automatically modify any part of a woman’s contract that was less favourable than the contract of a male comparator who did the same work or work that was rated as equal.

The 1970 Act initially only dealt with equal pay for the same work, although a judgement by the European Court of Justice (ECJ) led to the Equal Pay Act being amended to incorporate the concept of “work of equal value” into UK law. A later ECJ decision also allowed equal pay claims to be brought where statistics showed an appreciable difference in pay between two jobs of equal value, with one carried out almost exclusively by women and the other predominantly by men, even if the discriminatory cause of that difference could not be identified. As such, where a claimant group comprised exclusively of women, a prima facie case of discrimination would be established if the male comparator group was paid more, with the burden shifting squarely to the employer to justify the difference in pay.

 

What is the current law on equal pay?

Although the current law on equal pay in the UK remains substantially similar as above, the Equal Pay Act 1970, together with other pieces of equality legislation, including the Sex Discrimination Act 1975, were consolidated under the Equality Act 2010.

Under the Equality Act, the law on equal pay can be found under the “Equality of terms” provisions which provide that men and women must get equal pay for doing equal work. This is work that the law classes as the same, similar, equivalent or of equal value. This essentially means that everyone, regardless of sex, should receive equal pay for:

  • the same or similar jobs, where the job and skills are the same or broadly similar
  • work rated as equivalent, typically applying a fair and formal job evaluation
  • work of equal value, where the work is not similar but is still of equal value because of the demands made on an individual in terms of effort, skill and responsibility.

 
As with the Equal Pay Act 1970, where there is deemed to be equal work, the Equality Act 2010 implies a sex equality clause into an individual’s contract of employment, modifying it where necessary so that the person’s pay and conditions of employment are no less favourable than anyone of the opposite sex doing the same or equivalent work. Under the statutory “equal pay for equal work” principle, “pay” includes all terms and conditions, such as contractual leave entitlements and fringe benefits, as well as all forms of remuneration.

 

What is meant by “equal pay for equal work” under the Act?

For a person to be eligible to bring an equal pay claim, they must be able to show that there is someone else at work of the opposite sex getting more money, or benefitting from better terms and conditions, for equal work. In contrast to sex discrimination claims, which can be based on hypothetical comparators, equal pay law is limited by women having to point to real contemporaneous comparators employed by the same or an associated employer.

When it comes to “like work”, where a person must not get paid less compared to someone of the opposite sex doing the same or similar work, the rules on comparators are complex, not least when comparing across establishments. However, in Asda Stores Ltd v Brierley and others [2021], in a claim brought by thousands of female store workers citing male depot workers as their comparators, the Supreme Court ruled that these workers could refer to the terms and conditions of employment enjoyed by the depot employees as a valid comparison. This essentially means that if common terms apply at both the claimants’ and the comparator’s establishments, even if those terms are not identical, that cross-establishment comparison may potentially form the basis of a successful equal pay claim.

If there is unequal pay between valid comparators, employers can still argue that the difference in pay is not related to sex where, for example, it could be because of a skills shortage or geographical location. However, the burden is firmly on the employer to prove this where, in 2019, presenter Samira Ahmed won an equal pay claim against the BBC on the basis that it had not provided sufficient evidence to justify the higher rate of pay for a comparator male presenter. It was the unanimous judgment of the tribunal that by virtue of the sex equality clause under the 2010 Act, the terms relating to pay in the contracts for presenting “Newswatch” should be modified so as not to be less favourable than the terms relating to pay under Jeremy Vine’s contracts for presenting “Points of View” because:

  • Samira Ahmed’s work on “Newswatch” was like the work done by Jeremy Vine on “Points of View” under section 65(1) of the 2010 Act, and
  • the BBC had not been able to show that the difference in pay was because of a material factor which did not involve subjecting the claimant to sex discrimination (section 69(1) of the Act which provides for a “defence of material factor”).

 
In effect, the tribunal found that the BBC had simply not provided sufficient evidence to justify Jeremy Vine’s higher rate of pay. The employer must therefore be able to point to, and prove, a non-discriminatory material factor to objectively justify any difference.

 

Equal pay & employer obligations

The law on equal pay is designed to ensure that women and men receive the same pay and other contractual benefits when they are doing equal work. As such, the Equality Act 2010 imposes a statutory obligation on every employer, regardless of their size and resources, to eliminate discriminatory pay practices and any pay disparities within the workplace.

The employer’s obligation to ensure equal pay and conditions extends not only to employees, but to others types of workers, including full-time, part-time, agency and casual workers. Even though the law on equal pay was introduced to narrow the gender pay gap in favour of women, the provisions also apply equally to both male and female workers.

At first blush, the law on equal pay in the UK may seem complicated, but its purpose is simple: to ensure that where women and men are doing equal work they should receive the same rewards for it. The provisions on equal pay are also usefully brought together in a Code of Practice produced by the Equality and Human Rights Commission (EHRC), helping to explain the statutory obligations imposed on employers under the Equality Act. The EHRC Code provides employers with an authoritative, comprehensive and technical guide to the legislative provisions on equal pay, drawing on case law and precedent to illustrate where and how the provisions of the 2010 Act can be brought to bear in real-life situations.

For larger employers, reference should also be made to the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which now make provision for mandatory gender pay gap reporting. The gender pay gap refers to the difference between the average pay of men and women within an organisation, where any employer with 250+ employees on a specific date each year must report this data. These mandatory reporting provisions were introduced by the UK government with the aim of narrowing and eliminating the pay differential between men and women which remains significant, despite equal pay laws. These newer statutory requirements are essentially designed to help employers identify any gender pay gaps in their organisations and to take action in response to close those gaps.

 

Failure to comply with equal pay laws

If a claim for equal pay claim is upheld, an employment tribunal can make a declaration that the claimant is entitled to receive the same pay and contractual benefits as any comparator, so as to provide equality for that individual moving forward. The tribunal can also order the employer to pay any arrears of pay, together with interest, based on what the claimant should have been paid had they not been discriminated against on the basis of their sex. This award can date back 6 years prior to the date that proceedings were issued.

An equal pay claim can be issued by either an existing or former worker, although a claim must be issued in the employment tribunal within 6 months of the claimant’s contract of employment coming to an end. A worker alleging inequality of pay can also issue a claim before the civil courts for which there is a more generous 6-year time limit.

Defending a tribunal or court claim can be a costly and time-consuming exercise for employers. Allegations or findings of discriminatory pay practices and pay disparities within the workplace can also have a damaging effect on the employer-brand, deterring both sexes from joining that organisation in the future and even causing existing staff to leave.

 

How can employers avoid complaints under equal pay laws?

Even though equal pay laws have now been in place for almost 50 years, the UK’s overall median gender pay gap remains at around the 14% mark, with employers still often finding themselves defending equal pay claims before the employment tribunals. However, there are steps that can be taken to help avoid equal pay complaints in the workplace, where the EHRC Code of Practice provides a helpful section on good equal pay practice, including best practice tips on how prevent or eliminate any unjustifiable pay inequalities at work.

In particular, employers are encouraged to conduct a review of the pay received by both male and female workers. In doing so, the employer must decide the scope of the audit and identify the information required, as well as determining where women and men are doing equal work, before collecting and comparing pay data to identify any significant pay inequalities between roles of equal value in their organisation. They must then seek to establish the causes of any significant pay inequalities and assess the reasons for them, and put in place an equal pay action plan to remedy any pay discrimination, in this way eliminating pay inequalities that cannot be explained on non-discriminatory grounds.

Employers should also regularly review and monitor their equal pay practices by way of these audits, where disputes over equal pay usually arise out of pay systems not being kept under review and up-to-date, rather than any deliberate intention to discriminate.

Even though an employer is not bound to follow the steps set out in the Code of Practice, the tribunals and courts are obliged to take into account any part of the Code that may be relevant when considering an equal pay claim. By following the guidance in the Code, it can often help to avoid an adverse decision in legal proceedings, not least where an audit is clearly documented. It can also help to minimise any conflict within the workplace caused by pay disparities, helping to create a fair working environment for both men and women.

 

Need assistance?

For specialist advice on equal pay, including developing equality policies and dealing with unlawful discrimination complaints, contact us.

 

Equal pay laws FAQs

What is Equal Pay Act UK?

What is the Equality Act 2010 UK?

The Equality Act 2010 is an Act of Parliament introduced by the UK Government with the main purpose of consolidating, updating and supplementing the numerous Acts and Regulations that previously formed the basis of anti-discrimination law in the UK.

What is the Equality Act 2010 Code of Practice on equal pay?

The equal pay provisions under the Equality Act 2010 are discussed in detail in a statutory Code of Practice issued by the Equality and Human Rights Commission, illustrating how the Act’s provisions can be brought to bear in real-life situations.

What is the difference between equal pay and gender pay gap?

Equal pay refers to where men and women receive the same pay and other contractual benefits when doing equal work, while the gender pay gap refers to the difference between the average pay of men and women in an organisation.


 
Last updated: 1 March 2024

Author

Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility.

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners, we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

Legal Disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct at the time of writing, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

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