New EOC guidance on market forces

PAY DISCRIMINATION

New EOC guidance on market forces

Market forces can provide a defence to an equal pay claim, but the scope for using market forces to justify the difference in pay between a man and a woman doing equal work is limited, according to new guidance published by the Equal Opportunities Commission.

As the EOC explains: "An employer cannot rely on the fact that the market rate suggests that certain jobs usually done by women are paid at less than jobs usually done by men, because the market rate may itself be based on discriminatory assumptions. What an employer has to show is not that 'that's what everybody else pays' but rather 'that's what I had to pay to get the person I needed to fill the vacancy I had'."

For a market factor to act as a defence to an equal pay claim you must be able to show that the factor was genuinely taken into account when setting the rates of pay of both the applicant and the comparator. To succeed any "genuine material factor" defence must satisfy three distinct elements:

• the difference between the claimant’ s and comparator’ s contractual term must be "genuinely due" to (i.e. be in reality caused by) a relevant factor
• that factor must be "material" in the sense that, it must be "significant and relevant"
• the employer is able to show that the factor on which it relies is free from both direct and indirect sex discrimination.

Want to know more?

The new report is available free of charge on the Equal Opportunities Commission web site at www.eoc.org.uk/cseng/advice/practical_tips_on_equal_pay.asp?SubDate=Wednesday+24+December%2C+2003

The EOC web site contains a series of practical guides that aim to help employers deal with the more common causes of unequal pay in the workplace. The "tips" will help you sort out any problems identified by the equal pay review process.

There are now 13 guides covering:

• benefits
• bonus payments
• competence pay
• equal pay and working time payments
• equal pay for like work
• equal pay for work of equal value
• equal pay reviews and human resource/payroll software
• grading
• market factors
• performance-related pay
• progression
• red circling
• starting pay.

To access these reports visit www.eoc.org.uk/cseng/advice/practical_tips_on_equal_pay.asp

Posted 5 January 2004