There are fundamental rights for employees that are protected by the law. This includes the right to equal pay and contractual benefits for people of the opposite sex.
Employers must provide the same or equal pay to people doing the same job or work of equal value. However, this isn't always the case.
If you don't comply with the laws as an employer, your employee can file an equal pay claim against you and take you to a tribunal. This can cost you money and harm your reputation.
In this guide, we'll discuss what equal pay is, the laws around it, and how to comply with it in your business.
What is equal pay?
Equal pay means that men and women in the same job doing equal work for the same employer must be paid equally. This is stated in the Equality Act 2010, which all employers must follow.
This means that any pay difference between people of opposite sex, or another protected characteristic, who perform equal work must be justified.
What counts as equal work?
Equal work is legally defined as either:
- Like work: This is work in which the actual job and the skills are the same or comparable. In these cases, the differences in people's roles are not of practical importance.
- Work rated as equivalent: This is rated through a fair job evaluation. In these cases, the amount of skill, responsibility, and effort it takes to do the work is equal.
- Work of equal value: Work that is different but is of equal value. This is when the demands of the working environment and the amount of skill, training, and responsibility are of equal value.
In some cases, two jobs can be considered as equal work by the courts, even if the roles appear to be different. For example, an administrative job and a warehouse job could be considered equal work.
Who has the right to equal pay?
Equal pay is applicable to:
What is an equal pay claim?
An equal pay claim can be made by a worker who isn’t being paid the same as their colleagues of the opposite sex in the same role.
For example, a female employee could claim equal pay if a male employee doing equal work is receiving more pay than she is.
These claims can be made by either existing or former workers. But a claim must be filed with the tribunal within six months of the individual's employment contract ending.
However, a worker alleging pay inequality can bring a claim in the civil courts. Here, there is a more lenient six-year time limit.
Possible defences to an equal pay claim
You can make the following defences in response to an equal pay claim:
- The employee and her chosen comparator are not performing equal work.
- The comparator is not in the same business.
- The difference in pay is because of a genuine material factor that isn't related to sex.
The material factor must not be directly discriminatory in order to provide a valid justification. It can be personal differences between the people involved, such as experience and background.
A material factor is deemed directly discriminatory if it focuses on treating men and women differently based on their sex.
Why is equal pay important?
Providing equal pay for the same job is important mainly because:
- It's a legal requirement under the Equality Act 2010.
- It's an important step in promoting workplace equity.
Pay inequality is more common during the professional lives of women. Over time, it has an impact on both individuals and society as a whole.
As a result of restricted living standards and reduced pension contributions, people are at a greater risk of relative poverty in the long run.
The UK law on equal pay
The UK's equal pay law is outlined in the Equality Act 2010.
This superseded previous equal pay legislation under the Equal Pay Act 1970, the Sex Discrimination Act 1975, and equality provisions in the Pensions Act 1995.
The law on equal pay came into effect to address the gender pay gap between men and women and prevent sex discrimination. The statutory provisions, however, apply equally to both male and female workers.
What are employers' obligations around equal pay?
Every employer, regardless of size, must avoid pay differences and discriminatory pay practices in their business.
This means that, as an employer, you must ensure that your pay systems are transparent. If there's a lack of transparency in your pay system, you must be able to prove that there's no sex discrimination behind the difference in pay.
If your workers can provide evidence of sex discrimination in their pay, you must prove that the pay system doesn't discriminate.
What are the awards of equal pay claims?
In an equal pay claim, the employment tribunal can award claimants the following:
- A declaration stating that the claimant is entitled to the same pay and benefits as any comparator. This is to ensure equality for the person in the future.
- An order to you, as the employer, to pay any arrears of pay plus interest. This is based on what the claimant should've received if they had not been discriminated against. The award can be made up to six years before the proceedings were issued.
If you lose an equal pay claim, you can be ordered to conduct an equal pay audit and disclose the results.
This doesn't apply to you if you have fewer than 10 staff or if your company is less than one year old when the complaint was issued.
How is equal pay calculated?
Equal pay cannot be calculated. However, conducting an equal pay audit can help you identify whether your pay system is fair.
An audit also helps in protecting you against the possibility of discrimination claims and the consequences of breaching employment law.
How to comply with equal pay laws?
You are more likely to be in compliance with the laws if you implement transparent equal pay systems and ensure that comparable staff members are paid equally.
You should take the steps below to lessen the possibility of unequal pay in your business:
Develop an equal pay policy
An equal pay policy helps you be transparent and upfront with your employees regarding pay and other employment conditions. In the policy, you should outline the following:
- How you intend to pursue equal pay.
- How you assess if the policy is effective.
- How you want to handle any concerns around equal pay.
- How you intend to address any unequal pay concerns in your business.
The policy should be straightforward and easy for your employees and workers to understand. If your business has a trade union or employee representatives, you should engage with them to develop the policy.
Check for equal pay issues
Depending on how many staff you have, you can check for equal pay issues in different ways.
If you have 50 or more staff
If you have 50 or more staff members, you can conduct equal pay audits to check for possible issues and provide the results to the counted members. To do an audit, you need to:
- Check and find people doing broadly similar work.
- Perform job evaluations if needed.
- Collect details on pay and contractual terms for people doing equal work to see if there are any differences based on gender grounds.
- If you find any differences, verify the justifications and legality.
- Make an action plan as soon as possible to resolve any cases of unequal pay.
If you have fewer than 50 staff
If you have fewer than 50 staff, you can perform an equal pay review, which has fewer steps compared to an audit. To perform a review, you should:
- Check to see who is completing broadly similar work.
- Collect details on pay and contractual terms for people doing equal work to see if there are any differences based on gender grounds.
- Make an action plan as soon as possible if you suspect inequality of pay.
You should inform the staff included in the review of the results.
Get advice on equal pay from Peninsula
By law, people must be paid equally for doing work, which is considered to be the same, similar, equivalent, or of equal value.
In the event that you fail to provide equal pay for equal work, then an employee may file a claim, which is usually handled by an employment tribunal.
Peninsula offers 24/7 HR advice which is available 365 days a year. We can help you with individual circumstances that you may be facing, which can be a complex area.
Want to find out more? Contact us on 0800 051 3687 and book a free consultation with one of our HR consultants.
