The Law on Equal Pay

The Act inserts an ‘equality clause’ into every person’s employment contract. This has the effect of modifying all terms of a contract so as not to be less favourable than that of a person of the opposite sex. If terms are found to be less favourable, the employee may be able to bring a claim under the Act.

‘Pay’ under the Equal Pay Act includes all contractual entitlements. This means not only pay, but also holidays, subsidies, contractual bonuses and benefits are covered.

The Act applies to all employees, male or female, full or part-time.

Article 141 of the EC Treaty

Sex discrimination in pay is also covered by European legislation.

‘Pay’ under Article 141 in European Law covers any benefit, contractual or otherwise, received as part of the employment relationship. Its broader definition may provide a remedy where UK legislation does not.

Sex Discrimination Act 1975

This Act regulates discrimination relating to non-contractual payments.

Gender Equality Duty 2007

The duty requires all public authorities to actively promote gender equality and remove all sex discrimination. For more details please see 'New Gender Equality Duty Introduced'.

An Equal Pay claim can be made on the basis of comparing the claimant’s job to that of a member of the opposite sex (the comparator) in one of three ways:

‘Like Work’

Job roles must be the same or broadly similar.

The work will be looked at to see whether it is similar enough, if there are significant differences they will be examined as to their nature and extent and whether they are of practical importance in relation to terms and conditions.

Basis of a claim: an employee is paid less than a person of the opposite sex for doing the same job.

‘Work rated as equivalent’

The employer has carried out a job evaluation scheme and the claimant’s job role has been rated as equivalent to that of the comparator’s job role (they can be entirely different jobs).

The job evaluation scheme must be valid and comply with the Equal Pay Act.

Basis of a claim: people doing different jobs but who are on the same grade are paid less along gender lines.

‘Work of equal value’

Usually no job evaluation scheme has been carried out.

The two job roles must be of the same value, in terms of level of skill, but can be completely different in terms of actual work done.

Claims can be made using comparators under different grading schemes or different job evaluation schemes.

The tribunal will appoint an independent expert to evaluate the jobs and report to the hearing.

Basis of a claim: people in different jobs of equal value to the employer are paid less along gender lines.

The Comparator

The comparator must be a person of the opposite sex.

It is necessary to state all possible comparators when lodging a claim, as it is very difficult to add further comparators once it is lodged.

A comparator could be a predecessor or a successor in the same job role as the claimant.

Each term of a contract is viewed separately. Therefore even if the comparator earns a lower salary, a claim can be made if, for example, they receive a bonus that the claimant does not.

Under the Equal Pay Act, the comparator must be employed by the same or associated employers, whereas under Article 141 of the EC Treaty the comparator only has to be in ‘the same establishment or service’, however, case law has yet to establish the exact meaning of this.

An Employer’s Defence

An employer may be able to prove that the difference in pay between a claimant and their comparator is due to a ‘genuine material factor’ other than gender. They must prove that this factor was both the cause of the difference and continues to be so.

An employer can not use a material factor that is in any way affected by indirect discrimination. Indirect discrimination is where a factor unintentionally has the effect of disadvantaging predominantly one sex more than the other. An example would be part-time workers being given fewer benefits than full time workers. As the majority of part-time workers are women this would be deemed to be indirect discrimination under the Equal Pay Act.

Possible defences

Market forces: the employer would need to provide evidence of a genuine reason why market forces have caused pay differences.

Pay increments: these should only be given on the basis of genuine progression or improvement. The specific circumstances of the case would need to be examined.

Red circling (the practice of pay protection): this may explain the reasons for a difference but does not justify it, if it is based on sex discrimination. The particular circumstances would be looked at as there may be valid reasons for the pay difference.

A Job Evaluation Scheme has given the comparator a higher value: this is a valid defence unless the scheme is shown to be invalid or discriminatory in some way.

Qualifications: the employer would need to provide evidence.

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