Public and Commercial Services Union

UK and European equal pay legislation is based on the fundamental principle that men and women should receive equal pay for equal work. The law provides for equal pay between women and men in the same employment where they are employed on:

• like work (that is the same or broadly similar work);
• work rated as equivalent (under a job evaluation scheme);
• work of equal value (determined by comparing work under such headings as effort, skill and decision).
• These are individually and collectively referred to as 'equal work'.

Comparing jobs on the basis of equal value means that jobs, which are quite different in their nature, can be used as the basis for equal pay claims. Job comparisons can be made both within a particular pay/grading structure and between different structures.

What is pay?

The European Court of Justice (ECJ) has held that pay means all benefits, whether present or future, contractual or non-contractual, where the worker receives it, even indirectly, in respect of his employment from his employer.

The ECJ has also found that elements of the pay package should be considered separately, including, for example, leave entitlements, redundancy or severance payments and pension arrangements (but excluding pay elements which can only be received by one gender, such as maternity and paternity provisions. Equal pay claims can be made where there are differences between the genders in any element of pay.

Who can make claims?

A man or a woman can make an equal pay claim, but the comparator must always be of the opposite gender to the applicant. In practice, most applicants are women and to avoid repetition in this guide it is generally assumed that applicants are women comparing themselves with men. It is possible for an applicant to take a case for equal pay with a predecessor or successor of opposite gender in the same job, but a hypothetical comparator is not possible.

Under UK law, an applicant can compare her/his work with any comparator of opposite gender 'in the same employment', that is, where both have the same employer (or associated employers) and work:

• at the same establishment; or
• at different establishments, but where 'common' terms and conditions apply.

It might be further possible to make comparisons where the workers are employed in the same service as a result of European Community (EC) law. This has allowed claims in the UK public sector, where there have been different employers (in one case, two local education authorities, where there was a central financial control), on the basis that they were employed in the same service applying that formulation in a "loose and non-technical way". It may also extend the circumstances where a case may be brought against the same employer where the workers are employed at different establishments. Case law is still developing in this area and the concept of "same service" has not yet been fully tested before the ECJ.

A basic principle of English and Scottish constitutional law is "that the Crown is indivisible". This is unaffected by the devolution settlements. Consistent with this principle, all civil servants are "employed by the Crown within a named department or agency" The granting of delegations, including that for pay, to departments and agencies does not affect this principle. The fact that civil servants are employed by the Crown does not prevent departments and agencies having different terms and conditions, including pay, that apply to staff working in their organisations.

The union has taken an equal pay case between departments (the case was Huish v DEFRA).

Unfortunately it was ruled that each department was in essence a stand alone pay area and that claims could be not be taken between them. The union is currently seeking to challenge this at the EU level.

Job evaluation

As the UK legislation currently stands, a job evaluation scheme can provide an initial defence to an equal pay claim, where all the following apply:

• it is an analytical (that is, factor based) scheme;
• it is non-discriminatory in both design and implementation;
• a single scheme covers both applicant and comparator jobs;
• the jobs in question have actually been analysed and evaluated under the scheme and the evaluation is still valid.

The Job Evaluation and Grading Support (JEGS) system is an analytical methodology developed for use within the civil service. The system was devised to be free of gender bias. As with all job evaluation methodology, it is important to ensure that the system is applied fairly and consistently. JEGS was revised in 2000. (See Appendix for more details of the definition of equal work.)

Pay discrimination

Illegal pay discrimination occurs where women and men who are in the same employment do not receive equal pay for equal work, or do not have equal access to each element of the pay system. It is the impact of a pay practice that determines whether pay discrimination has occurred, not the employer's intention.

Most pay discrimination is not intentional but is the product of long-established, unquestioned pay practices, job-segregation or a traditional undervaluing of women's work and competencies. As the EOC Code of Practice says:

"Sex discrimination in pay now occurs primarily because women and men tend to do different jobs or to have different work patterns. As a result it is easy to undervalue the demands of work performed by one gender compared with the demands associated with jobs typically done by the other. Such differences can be reinforced by discriminatory recruitment, selection and promotion procedures which may restrict the range of work each sex performs; for example, by allocating the full-time, higher paid, bonus-earning jobs mainly to men."

Both the EOC and the EC Codes of Practice give examples of pay practices which may be discriminatory. Much of the basic explanation of equal pay law in the remainder of this section closely follows that in the EOC Code.

Implications for employers

Gender discrimination in pay is unlawful and in the course of claims employers can be called upon to explain and justify their pay practices in great detail. Equal pay cases have proved long, tortuous and costly. If an applicant is able to show that her work is equal to her comparator's, and that her comparator's contract contains a more favourable term, then equal pay will be awarded, unless the employer can prove that the difference between the contracts is genuinely due to a material factor and not the difference in gender.

Material factor defence

The material factor defence is the reason put forward by the employer to explain why the comparator is paid more than the applicant. You only get to the point of justification if there is evidence of a disparate effect on the ground of gender. But what you may have to do, is show that you have a genuine material factor unconnected to gender, which means that a particular woman is paid less than a man. It may not be necessary to justify that factor, but you will have to be able to show that it is genuine. Possible material factor defence arguments include:

• market forces/recruitment and retention factors, where the additional pay was made in response to demonstrably higher market rates than the normal grade rate. (There should be clear evidence of the external market comparisons used, assurance that the comparison is appropriate and that the market information is not influenced by discriminatory factors eg job segregation.);
• differences in individual performance (this should be supported by clear evidence of how this has been assessed);
• differences in experience (but probably only, where this can be shown to reflect differences in competence, performance or output); and
• differences in collective bargaining arrangements.

There are, other possible material factor defences. It is important to remember that where an applicant is able to establish that she has been employed in "equal work" with her comparator and her pay or terms and conditions are less favourable, the onus falls on the employer to put forward the factor which will explain the variation. An applicant will not be able to win an equal pay case, where there is no disparity on the ground of sex, if the employer can establish that:

• the variation is genuinely due to the factor put forward;
• the factor is material;
• the factor is not based on a difference of sex.

The factor is treated as genuine if it is the real reason for the difference. Whilst a factor which is a sham or a pretence would not pass the test neither will a factor which is based on unconscious sex discrimination.

The employer's ability to pay will not be a sufficient defence if the employer discriminates on the ground of sex in making payments to his/her employees.

It is not sufficient to claim that women are paid less than men because they are prepared to work for less or because the type of work they carry out is traditionally treated as "women's work" which attracts lower pay.

A woman and her comparator may be paid at different rates because their jobs are included in different pay bargaining groups. This can constitute a genuine material factor. If, however, a collective bargaining system results in a group, predominantly made up of women, being paid less than comparators who are predominantly men, it cannot constitute a genuine material factor, but it may be possible to objectively justify the system.

Objective justification

If there is any question of discrimination causing a disparate impact between women and men then the factor involved which is put forward as a defence must also be objectively justified. Where there is no such suggestion then there is no such requirement.

The legal test in relation to objective justification is still developing particularly in the light of the impact of community law in this area. However, essentially an employer must be able to demonstrate the reasons behind the differences in pay between comparable groups of women and men are not associated with the gender of the job holders but:

• are necessary to meet real business objectives;
• do in fact lead to the objectives being met; and
• that there is no less discriminatory way of meeting the objectives.

Both the material factor defence and the objective justification test are essentially explanations for how the difference in pay arises and are closely related. Employers therefore need to take the above into account and conduct a careful balancing exercise when formulating policies which will have a disparate impact on one gender more than the another. A failure to objectively justify such a policy irrespective of gender will mean there has been a breach of the principles of equal pay. In other words the practice must be a proportionate response to the needs of the business as against the rights of the workforce.

Equality clause

The UK Equal Pay Act currently enables up to two years back pay to be awarded to a successful claimant. The Employment Appeal Tribunal has indicated that up to six years back dated award is more suitable in order to reflect community law. The government has published a consultation document, prior to any amendment to the legislation, which canvasses such an increase in the back dated pay award.

The Burden Of Proof

Following the structure of the Equal Pay Act, it has generally been accepted in the UK that, once an applicant has demonstrated that there is a prima facie case for equal pay (for example, by showing the average female earnings in the grade in question are lower than average male earnings; or that men cluster towards the top of the earnings range, while women's earnings are towards the bottom) and the applicant's job has been found to be of equal value to that of the comparator, it is for the employer to show why equal pay should not be paid. This is in line with the EU Burden of Proof Directive, which is now in force.

Transparency

It is important that a pay system is clear and easy to understand; this has become known as 'transparency'. The EOC Code defines a transparent pay system as one where employees understand not only their rate of pay but also the components of their individual pay packets and how each component contributes to total earnings in any pay period. Transparency is an advantage to an employer as it will avoid uncertainty and perceptions of unfairness and reduce the possibility of individual claims.

The ECJ has held that where an organisation applies a system of pay which is wholly lacking in transparency and which appears to operate to the substantial disadvantage of one gender (e.g. as indicated by higher average earnings of broadly comparable groups of male and female workers), then the onus is on the employer to show that the pay differential is not discriminatory. Therefore, as the EOC points out, an employer should ensure that any elements of a pay system which could contribute to pay differences between employees, are readily understood and free from gender bias.

 

Appendix : Equal Work
 

Introduction

A fundamental aspect of the pay review is to compare the pay of men and women carrying out equal work. In the terms of the UK legislation, equal work may encompass three strands: like work, work rated as equivalent under a job evaluation scheme, or work of equal value.

Like work

This is perhaps the most straightforward of the three strands. It consists of a test made up of two parts, which must be considered separately:

i) Is the work, the female applicant is carrying out, the same or broadly similar in nature to that of her male comparator? Consideration is given to the type of work involved and the skill and knowledge required to do it.

ii) Are there any differences in their terms and conditions of employment, which are of practical importance? Trivial differences are disregarded.

It is important to look at the entirety of the applicant and the comparator's job. That is, the work which is done, rather than what is contractually expected of the applicant as against the comparator. The work does not have to be identical as long as it is broadly similar, so a cook in a director's kitchen was found to be doing work of a broadly similar nature as that of an assistant chef in the company canteen. The circumstances in which the applicant and comparator do their work should also be taken into consideration. This will include whether the degree of responsibility differs between them, this may be decisive where one employee is in a different grade from another with whom a comparison is being made.

Work rated as equivalent

For most government departments and agencies that have adopted JEGS, or a similar proprietary job evaluation system, the easiest way to measure equal work will be work rated as equivalent by the job evaluation scheme. This is because, provided a job evaluation scheme meets certain standards, it will provide an objective basis for determining equal value and should provide a defence to equal work claims.

In essence those standards are that the job evaluation scheme is analytical, and non-discriminatory in both design and implementation. Even where the design has been checked and regularly reviewed at national level, as with JEGS, it will still be necessary to check that the scheme has been implemented in a fair and non-discriminatory way. It is important to remember that a job evaluation study can only be challenged if it is shown that it included a fundamental or plain error. For example, the courts would invalidate a job evaluation study, which incorporated direct or indirect discrimination. To obtain the benefit of a job evaluation scheme a woman must be within a group of employees that have been evaluated.

Equal value

Equal Value claims raise greater problems than claims based on like work or work rated as equivalent. Jobs which may not be the same or even broadly similar can be valued against each other. This raises the difficult question of how value is to be assessed. Often such considerations are almost impossible to make until a challenge is made by an individual. It is important to bear in mind that equal value provisions are not intended to introduce pay systems that are fair but to ensure gender discrimination in pay is eliminated. The legal proceedings and procedures for conducting equal value cases can be lengthy and complex involving analysis by independent experts.