Gender pay audits merely identify equal pay problems, not solve them

To see the celebrations of the claimants in the case of Birmingham City Council v Abdullah and Ors [2012] UKSC 47 following last week’s Supreme Court decision, you would think that they had just won an equal pay case – but they haven’t. They have simply won the right to bring their claims in the High Court rather than the employment tribunal where they would be time-barred.

Equal pay works differently from discrimination. It isn’t based on a statutory tort, but on the statutory implication of an ‘equality clause’ into a contract of employment. Since the claim is ostensibly based on a breach of contract, it seems natural that the Equal Pay Act – and now the Equality Act – allows a claim to be brought either in the employment tribunal or the normal civil courts.
There is a provision, however, allowing a court to strike out a claim if it can ‘more conveniently’ be dealt with by the employment tribunal (section 2(3) of the Equal Pay Act 1970, now replaced by section 122 of the Equality Act 2010). Since employment tribunals have specialist knowledge and experience of such claims, it has previously been assumed that it would always be more convenient to hear an equal pay claim in the employment tribunal and the jurisdiction of the civil courts has tended to be seen as a historical quirk rather than a realistic option.

Speculative exercise

In the Birmingham case, however, the claimants took advantage of the fact that while the time limit for bringing an equal pay claim in the employment tribunal is a strict six months from the end of the employment, a claim for breach of the equality clause can be brought at any time within the normal limitation period of six years. The issue for the Supreme Court was whether a claim can be “more conveniently” dealt with by an employment tribunal even though the tribunal would be required to dismiss the claim as being out of time.

By a majority, the Supreme Court held that dealing with a case conveniently means hearing it on its merits, not simply rejecting it.
Will this case open the floodgates for thousands of stale claims to be brought in the civil courts? Perhaps; but these claims are certain to be largely confined to the public sector. The fact is that equal pay claims in the private sector remain rare. That is not because private sector employers are less discriminatory, but because Public sector employers have made it much easier for large-scale equal pay claims to be brought

The main challenge facing equal pay claimants is proving that they are employed on equal work with a comparator. Unless the two jobs are identical that involves a detailed analysis and evaluation of each role to determine whether they are of equal value or can be rated as equivalent. This is a speculative exercise. Judging the respective value of two different roles always comes down to value judgements about what a particular aspect of somebody’s job is worth – however much number crunching analysis seeks to disguise that fact.

It is here that the public sector has been so helpful. The ‘90s saw major pay restructuring in the health service and local government. Detailed job evaluations were carried out which disclosed widespread disparities between jobs traditionally done by men and those traditionally done by women. As a result the door was opened for tens of thousands of equal pay claims from those in female dominated roles which had been rated as equivalent to jobs traditionally done by men. The employers’ own job evaluations meant that the issue of equal work was already settled.

The Birmingham claimants have not won anything yet – but showing that they were employed on ‘equal work’ with their comparators should be straightforward.

Private sector pressure

In the private sector, employers are less likely to hand such a gift to prospective claimants. Also, pay schemes tend to be less rigidly structured so it is less easy to compare the pay of one group of employees with another in order to bring large ?multiple claims.

There is, however, increasing pressure on private sector employers to carry out gender pay audits to identify areas within their business that may have an equal pay problem. Indeed the Enterprise and Regulatory Reform Bill currently before parliament makes provision for employers to be ordered to carry out an audit if they lose an equal pay claim.

It is important to realise, however, that a gender pay audit is not a solution to an equal pay problem, it is simply a way of identifying and quantifying it. Its immediate effect is to create valuable evidence for anyone willing to bring an equal pay claim and so employers should only undertake the exercise if they are prepared for the consequences – including paying up to ?six years back pay to employees who are being underpaid.
The way to solve an equal pay problem is to pay women more. Employers contemplating an equal pay audit should make sure that they can afford that before they incriminate themselves.