Emily Kearsey is a solicitor in the London employment law team at Goodman Derrick LLP. In this article, she discusses equal pay law and ways in which tech entrepreneurs can avoid the gender pay gap.
The effect of equal pay law is that men and women should receive equal pay for equal work. On the other hand, the gender pay gap is a measure of the difference between average earnings of men and women in general, whatever their job roles may be.
These two interrelating areas of law are at the forefront of employment law today. This is in part due to high profile equal pay cases currently battling their way through the courts and also due to the new gender pay gap reporting rules which businesses across the country are grappling with.
Pay equality is a relevant issue given the real or perceived gender imbalance within the tech sector. We’ll take a look at some recent legal developments and provide guidance on the practical steps businesses can take to avoid a gender pay PR disaster.
Equal pay law
Men and women are entitled to equality in pay, treatment, and other contractual terms for doing “equal work”, or where their roles are considered “work of equal value”. To enforce this law, an employee can bring an equal pay claim to harmonise their pay with the comparator of the opposite sex who is being paid more.
Employers can pay one sex less than another for equal work in some circumstances but there will be a heavy burden to prove that any difference is due to a “genuine material factor” rather than because of the employee’s sex. So, for example, if a male employee is more senior, has a longer length of service, or is working night shifts rather than day shifts, this could theoretically justify differential treatment. However, employers should tread very carefully and ensure that they can properly justify pay differences.
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The significance of equal pay law and the obligations it brings to employers has recently been highlighted by an ongoing collective claim against supermarket giant, Asda.
In this high profile case, a collective equal pay claim was brought by over 7,000 (predominantly female) claimants, who sought to compare their work in retail stores to their male colleagues working in distribution centres. Asda maintains that the pay discrepancy is solely due to the fact that the demands of the two jobs, and the way their respective rates are calculated, are very different.
The Employment Tribunal held that the female retail workers could compare their work to their male colleagues in the distribution centres. A subsequent appeal by Asda was dismissed in August this year by the Employment Appeals Tribunal (EAT) on the grounds that the two types of work are of equal value and accordingly the two groups’ pay should be comparable. Time will tell what the overall outcome will be as Asda has been granted permission to appeal to the Court of Appeal.
Gender pay gap reporting
The Gender Pay Gap Regulations which came into force in April require employers with more than 250 employees to annually publish statistics illustrating their gender pay gap using both mean and median averages, including any gaps between bonuses. This increased transparency aims to highlight gender pay discrepancies, encourage public scrutiny of unfair practices and ultimately shame employers to action unjustified pay gaps.
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It may be comforting for some employers to note that when producing their annual report on pay gap figures (which is due by 5 April each year) there is an option to provide some narrative explanation for the results. This may include an explanation of the context in which the business operates and/or details about steps the business is taking to address the gender pay gap in their organisation.
How to avoid a gender pay gap
CHECK: Does your organisation come within the criteria of 250 or more employees? If so, you will be obliged to report annually.
REVIEW: Conduct a review of your pay structure and carry out the relevant calculations to identify any areas of concern or worrying discrepancies in levels of pay.
REASONING: If a gap is identified, consider the context behind this and whether it needs to be addressed.
ASSESSMENT: Assess the extent of any gender pay gap across the board.
TAKE ACTION: Consider taking remedial action in relation to any worrying discrepancies.