By law, men and women in the UK must generally receive equal pay for doing equal work. This means that a person must not get paid less compared to someone of the opposite sex doing the same or similar work, or work of equal value, for the same employer. However, there are exceptions to this rule, provided the reason for any difference in pay is not because of the person’s sex.
Below we look at the law on equal pay, and when equal pay for equal work doesn’t apply.
What does the law say about same job different pay?
Under the provisions of the Equality Act 2010, both men and women are entitled to get the same pay and contractual benefits for doing comparable work. These provisions are there to protect individuals from discrimination and bias at work by reason of their sex, and apply equally to male and female employees, although historically women have been paid less than men for doing the same or equivalent work.
Where the work is deemed to be equal, the Act implies a sex equality clause into the employee’s contract of employment, modifying it where necessary to ensure that their pay and all other contractual terms are no less favourable than anyone of the opposite sex doing the same or similar job. The equal pay provisions apply to all contractual terms including wages, non-discretionary bonuses, holiday pay, sick pay, overtime and occupational pension benefits, as well as to non-monetary terms, such as leave entitlements or access to sports and social benefits.
However, there are certain circumstances in which an employer can justify any differences in pay, provided they can show that there is a material reason for the difference which does not discriminate on the basis of gender. This is known as the ‘material factor’ defence.
In the context of an equal pay claim, where a person doing equal work is able to show that they are receiving less pay or other less favourable terms in their employment contract, or identifies a contract term from which a comparator benefits and they do not, the employer will be required to show the reasons for this.
If the employer is unable to demonstrate that the difference is due to a material factor that has nothing to do with the sex of the comparator or complainant, then the equality clause will take effect and the employee’s claim is likely to be upheld.
Can two employees doing the same job earn different pay?
It is not necessarily illegal for two employees doing the same or similar job to earn different pay, provided the employer can justify any difference in pay or other contractual benefits on the basis of a reason, or reasons, wholly unrelated to the gender of the jobholders.
However, the employer must be able to show that any material factor relied upon doesn’t discriminate against the complainant, either directly or indirectly because of their sex. A material factor will be directly discriminatory where it is based on treating men and women differently because of their sex. Indirect discrimination arises where a pay system, or workplace policy or arrangement, has a disproportionate adverse impact on female employees compared to their male comparators, or vice versa. If the employer cannot objectively justify the pay system, policy or arrangement, the material factor defence will not be made out.
A directly discriminatory material factor cannot provide any defence to an equal pay claim, and it is not open here to an employer to provide objective justification. In contrast, an employer can justify an indirectly discriminatory factor, where this has been alleged, but only by showing that it’s a proportionate means of achieving a legitimate aim.
If a person isn’t being paid equally for the same or similar job, their employer will be breaking the law, unless the employer can show that the difference in pay or other terms is genuinely due to a material factor that is not related to the gender of the jobholders. Still, gender isn’t always the reason why an employee is getting lower pay when compared to other employees.
Grounds to justify differences in pay
Where there are differences in pay or other terms, to successfully defend a claim an employer must identify the material factor(s) relied upon and be able to prove the following:
- It is the actual reason(s) for the difference in pay rather than a sham or pretence
- It is causative of the difference in pay between the complainant and their comparator
- It is material, ie; relevant and significant, and
- It doesn’t involve either direct or indirect sex discrimination.
This essentially means that even where an employee is able to identify a comparator at work who is better paid than them, or who works under more favourable contractual terms, these differences might be permitted, provided the employer can satisfy the four conditions above.
Any personal differences between the employees concerned, such as expertise and experience, may be material factors. In this context, an employer could argue that it was necessary to pay someone else more because of a staff shortage, provided they can prove difficulties in either recruiting or retaining staff to do the job being done by the higher-paid person.
Other examples of material factors could include geographical differences to reflect a higher cost of living in different areas. They could also include things like someone working unsocial hours, rotating shifts and night-working. For instance, if an employer can show that the only way to ensure adequate staffing of unsocial hours is to pay a shift premium, even if more men than women work those shifts and therefore receive the additional payments, the material factor defence may succeed.
In these circumstances the employer can justify an indirectly discriminatory factor by showing that it’s a proportionate means of achieving a legitimate aim.
In contrast, where employees’ pay is structured on the basis of success in building client relationships, using as one of the key indicators of that success the number of functions attended out of hours, it is unlikely this system can be objectively justified taking into account the disadvantage to women who typically have more childcare responsibilities.
However, there is no defined list of legitimate aims. As such, whether or not a particular pay practice or policy pursues a legitimate aim, and the means to adopt that aim are proportionate in all the circumstances, will depend on the specific circumstances and facts of the case.
Equal pay for equal work test
In most instances, people doing the same or similar job, or work of equal value, should get equal pay, regardless of their gender. That said, there are still cases where people are paid differently for the same or equivalent work, even though the law says they should be paid the same. In some of these cases, an employer may be able to prove that any pay difference is genuinely due to a non-discriminatory material factor. The employer may also be able to argue that the complainant and their comparator are not actually doing equal work.
In the context of a claim for equal pay, the ‘equal pay for equal work test’ is essentially used to determine whether or not any comparator of the opposite sex is in fact undertaking the same or equivalent work. Under the 2010 Act, ‘equal work’ counts as either:
- work that is the same or broadly similar, provided any differences are not of practical importance (this is known as ‘like work’)
- work that is rated under the same job evaluation scheme as being work of equal value (this is known as ‘work rated as equivalent’)
- work that’s different but of equal value in terms of factors such as effort, skill and decision-making (known as ‘work of equal value’).
Under the ‘equal pay for equal work’ principle (or ‘equal pay for same job’), provided the complainant and comparator are deemed to be doing the same or equivalent work, and absent any material reason for any contractual differences, they must get the same pay and benefits.
When can an employee bring an equal pay claim?
If an employee has reason to believe they are subject to inequality of pay on gender grounds, they will be legally permitted to ask other members of staff about how much they earn and what benefits they get. The 2010 Act limits the enforceability of what are often called secrecy or gagging clauses that some employers use to restrict any discussions about pay packages and differentials.
An employee is also entitled to ask their employer directly for general information about other people’s pay and contractual benefits, and the reasons for any differences, although the employer will be required to preserve the anonymity and confidentiality of other employees for data protection reasons. If the employer fails to answer the employee’s questions within a period of eight weeks, or answers in an evasive or equivocal way, a tribunal can draw an inference, including an inference that the employer is in breach of the equal pay provisions.
If, having made inquiries and drawn comparisons, an employee is able to identify someone at work of the opposite sex or even someone who used to work for the same employer, who was paid more for the same job, or benefitted from more favourable terms and conditions, they may have a potential claim for equal pay. In these circumstances, employees are advised to discuss the matter first with their employer, but if the matter cannot be resolved informally, to raise a formal grievance in writing using their employer’s internal grievance procedure.
In cases where an equal pay issue cannot be resolved internally, the employee can then go on to issue tribunal proceedings, although they will first be required to notify ACAS that they intend to bring a claim through the ACAS early conciliation procedure. Only after this stage has been exhausted can the matter will proceed to a tribunal hearing for determination on the facts.
In cases where an employee is doing the same job as someone of the opposite sex but for different pay or terms, provided the work is equal, the tribunal will have regard to whether or not there are any material factors that have resulted in this difference. Unless the employer can prove that there’s a non-discriminatory material factor to explain any difference, or be able to objectively justify any indirectly discriminatory factor, the claim will be upheld.
Further, if any material factor accounts for only part of the difference in pay or benefits, the claim can still be upheld to the extent to which any difference is attributable to someone’s sex.
DavidsonMorris’ business employment law specialists provide advice to employers on all aspects of workplace equality, including equal pay. Working closely with our HR colleagues, we can support with reviewing and developing internal policies and practices to ensure compliance with equality legislation and any applicable reporting obligations, while protecting your commercial interests. If you have a specific question about or scenario relating to paying people different salaries for similar, or the same, work, speak to us.
Same job, different pay FAQs
Can a company pay different wages for the same job?
It is legal for a company to pay different wages for the same or similar job, but only if there are non-discriminatory material factors which explain the reason for the difference.
What is meant by equal pay for equal work?
Equal pay for equal work refers to the right under the Equality Act 2010 for both men and women to get the same pay and contractual benefits for doing comparable work, unless any difference in pay can be objectively justified.
Can you be paid less for doing the same job?
It’s possible to be paid less for doing the same job, provided your employer is able to show a material factor that explains the reason for doing this and that factor is wholly unrelated to your sex.
What is the Equal Pay Act 2010?
The provisions on equal pay are set out under the Equality Act 2010. This replaced the previous legislation, including both the Equal Pay Act 1970 and Sex Discrimination Act 1975, plus the equality provisions in the Pensions Act 1995.
Last updated: 29 May 2021