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Council sets aside £757m for equal pay claims

Figure for 2011/12 is up by 250m

13 November 2012

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Birmingham Council has set aside £757m to cover equal pay claims by mainly female workers who were paid less than men for comparable jobs.

The Supreme Court ruled last month in Birmingham City Council v Abdulla that 174 women, who worked for the council as cooks, cleaners and catering staff, could bring their claims in the courts rather than only at an employment tribunal.

The claims all fell outside the six month deadline imposed by the tribunal, but within the six year limitation period for bringing claims in the civil courts.

In an annual audit letter prepared by accountants Grant Thornton, the “cumulative estimated cost” to Birmingham council of the all equal pay claims was estimated at £757m.The outstanding liability at 31 March 2012 was put at £541m.

Grant Thornton said the claims related to pre-2008 employment contracts, and some revised contracts issued after that date, but the council had now issued further contracts which should “reduce the potential for any further liabilities”.

The accountants said the council had a “robust system” to process the claims but noted that the liability continued to increase significantly, with a 250m increase in 2011/2012.

“The future liability of the council is unclear, is dependant on legal decisions such as the recent Abdulla case, and continues to impact on the value for money provided by the council,” the auditors said.

Speaking to Solicitors Journal, Chris Benson, the partner at Leigh Day & Co acting for the women, said he valued the 174 claims in the Supreme Court at £2m.

Benson said he had a further thousand Birmingham cases in the courts and a thousand more at the employment tribunal.

He said they were unlikely to be worth more than £10m to £12m, and even if that figure was doubled, it would hardly reach £25m, leaving “many hundreds of millions for the other claims”.

Benson said he had a hundred more cases in Croydon, 350 in Wolverhampton and 100 in Blackpool.

“We’ve had enquiries from everywhere since the Supreme Court judgment,” he added. “The next step is to try and resolve the 174 cases through settlement.”

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Tribunals & Courts