23 September 2021 - Article
The former Chief HR Officer of the Co-op Bank is currently in a two week employment tribunal hearing arguing that she lost her role after raising concerns regarding pay inequality between herself and male board level executives. The Fawcett Society are supporting the claim and are calling for changes to the law regarding equal pay to make it easier for women to bring claims. In particular, the Fawcett Society criticises the length of time it takes for equal pay cases to conclude.
Many equal pay battles have been waged in the public sector, and more recently have emerged in the private sector, notably in a high profile equal pay battle brought by predominately female retail store employees at Asda who seek to compare themselves to a group of mainly male distribution depot employees. This case is likely to take many years to reach a final conclusion.
So, what makes it so hard to bring equal pay claims?
Whilst many women feel that they are paid less than comparable male colleagues, getting any evidence or confirmation of this can prove difficult. Employers are reluctant to provide pay data for those identified as comparators unless they are required to do so. Changes in 2014 to abolish statutory equal pay questionnaires have not helped either, as there is now little incentive for an employer to provide information at an early stage.
There are a number of factors that need to be proved in order for a claim to be successful, in particular, that the roles are comparable, which can require expert evidence. This point is often hotly contested, as in the Asda case, where Asda has appealed to the Court of Appeal against a decision by the EAT that retail store and distribution depot employees are comparable. In an individual case, an employer may also seek to run an argument that the state of the labour market meant that higher pay had to be offered to a new recruit. Expert evidence may also therefore be necessary to prove or disprove this point. This increases both the time and cost of bringing a case to a hearing.
Finally, the cost benefit analysis in equal pay claims can be very different from other tribunal claims. In a multiple claim, such as that brought against Asda, there may be vast sums of money at stake (an estimated £100 million in the Asda case). Even in an individual case, employers may feel it's worth fighting every point to avoid having a decision made against them that can be relied on by other employees. From the individual perspective, any sums recovered in an equal pay claim will be treated as taxable income rather than a payment referable to termination of employment. This means that any compensation awarded to you or any settlement sum you may receive does not benefit from the £30,000 tax free exemption and is subject to tax and NICs. Furthermore, the tax free exemption that applies to legal fees paid in connection with the termination of employment may not be available. From an individual employee's perspective the net amount recovered therefore has to be substantially more than the (likely quite substantial) legal costs to make the claim financially worthwhile.
What can you do in the face of these obstacles?
Firstly, talking to your colleagues and grouping together can help to gather information and share costs. The earlier you can do this, the more beneficial it will be. Even if employers insist that pay is a confidential matter and should not be discussed, the Equality Act protects you if you have conversations about pay for the purposes of establishing whether there is an equal pay issue. Equal pay claims can be brought in the civil courts up to six years after the employment ends so both current and former employees may have relevant information.
Secondly, taking early advice and establishing a clear strategy at the outset for resolving the dispute is essential. In our experience, employers are often willing to engage in without prejudice discussions to reach a privately negotiated resolution, rather than litigating through the courts and risk setting unwanted precedents.