With reports about differences in pay between high profile men and women seemingly in the news on a daily basis at the moment, there cannot be many people in the UK who have not wondered how their pay compares to colleagues of the opposite sex.
Under the Equal Pay Act 2010, it is illegal to pay men and women in the same organisation different amounts for doing equal work, unless there is a justification for doing so.
To be classed as equal work, the work being compared must be the same or broadly similar; must have been rated as equivalent by a job evaluation; or must be work of equal value due to the effort, skill and decision-making involved.
A disgruntled employee may seek to bring an equal pay claim in the employment tribunal, which could be very be costly: an employee can recover the difference in pay for up to six years and there is always the risk that one claim could snowball into a group action as other employees in the same role seek to join in the claim.
Even where a claim is not made, unequal pay can be demoralising and divisive among the workforce and cause significant damage to your reputation.
Where men and women are paid differently for equal work, you may be able to defend this by showing a material difference between the employees that explains the different rates.
This could relate to length of service or expertise and experience.
Market forces may also be relevant, but if you are trying to rely on this explanation you will need to tread carefully.
There are three immediate steps you can take to reduce the likelihood of a claim being made:
- Flush out any equal pay issues by carrying out an equal pay review. The Equality and Human Rights Commission (EHRC) offers guidance on how to undertake this.
- Act upon the findings of the review to iron out any differences in pay. This might mean changing pay or implementing pay freezes to allow other employees’ pay to catch up. This needs to be handled carefully and in accordance with legal advice.
- Consider putting in place a transparent pay system, as explained in the EHRC’s pay systems guidance.