EQUAL PAY
Commission urges "radical equal pay reform" . . . but rejects compulsory pay audits
The Equality and Human Rights Commission has called for radical reform of the 1975 Equal Pay Act, but businesses should not be forced to conduct equal pay audits. Nicola Brewer, the Commission's chief executive, said the Act was “no longer fit for purpose”.
Brewer reckons Britain's “outdated equal pay laws” are almost exclusively reliant on individual women bringing lengthy and costly tribunal cases when they experience discrimination - a system that delivers more conflict than change.
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At a time when the tribunal system is straining under an avalanche of equal pay claims, the limits of a so-called “complaints led” approach - as opposed to one that puts more onus on employers to ensure their pay systems are transparent and fair - are “increasingly obvious”.
Commission proposals
Ahead of the publication of the government's upcoming equalities bill, the Commission is calling for:
increasing transparency, by ensuring employees are allowed to discuss their pay by banning “gagging” clauses
larger companies to have a much more transparent approach to the pay gap by publishing the number of men and women in each pay band, to help identify segregation in workplaces and underlying reasons for the pay gap
representative actions to allow the Commission or trade unions to bring claims on behalf of a group of workers, therefore helping to clear the backlog of cases in the tribunal and deliver justice to women faster
empowering employment tribunals to make wider recommendations to avoid multiple cases from the same employer and ensure the root cause of the original claim are addressed
hypothetical comparisons to be permitted where no suitable comparators are available.
Separate review
Beyond the Bill, the Commission is calling for a high-level review to explore "further options for radical reform", including the possibility of “transitional arrangements”, where employers and workforce representatives committed to change have some protection from litigation while they put their house in order.
Brewer said a separate review could explore a practical and fair approach to address the fact that - as the law currently stands - employers are discouraged from complying with the equal pay legislation, because once they have recognised the reality of the gender pay gap in their organisation and committed to eliminating it, they are vulnerable to equal pay claims.
Serious consideration may need to be given to transitional arrangements, whereby employers and workforce representatives who are really committed to implementing equal pay are able to do so without immediately being derailed by litigation.
Compulsory pay audits rejected
The Commission argues that the mandatory equal pay reviews should be excluded from the forthcoming equalities bill. Writing in The Guardian on Friday 20 March, Brewer commented: "On the issue of mandatory pay audits, I want to be very clear. The Commission has made a major commitment to the use of equal pay audits as the bedrock of good equal pay practice. We believe that they are a useful diagnostic tool and have just published new advice on how they could help."
To read the article online go to: www.guardian.co.uk/commentisfree/2009/mar/20/equality-women.
The announcement triggered anger from women's rights campaigners:
www.guardian.co.uk/world/2009/mar/16/equal-pay-commission-business.
CIPD welcomes "pragmatic line" on equal pay audits
Commenting on reports that the Commission will advise government to shelve plans to introduce compulsory equal pay reviews as part of the forthcoming equalities bill, Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development (CIPD), said: “We welcome this pragmatic approach from the EHRC. There is a business case for ensuring all employees are paid fairly and equally according to their skills and contribution, not their gender or any other irrelevant attributes. But this case is likely to be harmed not helped by blunt legislative measures at a time when businesses are struggling to stay afloat.”
He added: “We believe the greatest return will come from a tireless and concerted effort by government and other agencies to promote the business case for fair pay - in good times and bad. Change will only truly occur through sustained communications to alter entrenched attitudes and practices. Enforcing equal pay audits could easily end up creating a box-ticking exercise that does little to tackle the broad and deep seated causes of gender pay inequality.”
Cotton continued: “Pay inequality has many causes - one of the biggest being the different career paths men and women take, and are encouraged to take from a young age. Ending ‘occupational segregation’ will have a far bigger impact, but this is unlikely to be assisted in any way by compulsory equal pay audits.”
Key facts
The most recent figures from the Office for National Statistics indicate that the full-time gender pay gap has increased to 17.1%, up from 17%. The part-time pay gap has increased from 35.8% to 36.6%.
When the Equal Pay Act came into force in 1975, the pay gap was 29.4%.
Based on these figures, the Commission estimates that the average woman who works full time will miss out on £369,000 over the course of her working life.
The number of equal pay claims lodged at employment tribunal has risen more than 150% in the last year, and almost 500% over the last four years for which figures are available. Equal pay claims now make up one in three of the claims being filed with the Employment Tribunal.
A final word
“The 1975 Equal Pay Act is no longer fit for purpose. We need to look afresh at what modern equal pay legislation should look like. The approach in the 1975 Equal Pay Act represented the best thinking at the time, and indeed helped close the gap from 29.4% to 17.1%. But it's time to shift the focus to preventing problems from arising in the first place, rather than tackling them through the tribunal system after the fact. The upcoming Equality Bill is a significant opportunity to move towards a modern approach.” - Nicola Brewer, Chair of the Equality and Human Rights Commission.
Want to know more?
The Equality and Human Rights Commission is a statutory body established under the Equality Act 2006, which took over the responsibilities of Commission for Racial Equality, Disability Rights Commission and Equal Opportunities Commission. To find out more visit www.equalityhumanrights.com.