The equal pay conundrum: what’s an employer to do?

The equal pay conundrum: what’s an employer to do?

By Raoul Parekh and Deborah Margolis - 27 March 2019

Following Asda’s recent unsuccessful appeal, this article considers equal pay claims through an employer’s lens.

Hot on the heels of International Women’s Day it is not an uncontroversial concept that men and women should be paid the same for doing equal work. Unfortunately, putting this into practice for employers isn’t always as straightforward as it might seem. Hence the rapid growth of equal pay litigation, which has seen claims against all the UK’s major supermarkets and other retail giants.

Equal pay claims are procedurally and legally complex, making them time consuming and expensive for employers to defend. The consequences of losing are also significant: an employer can be ordered to pay the differential in pay for up to six years plus interest and/or damages. With the number of claimants in recent equal pay claims totalling up to 30,000, this is no small figure - not to mention the negative publicity, time and cost involved in managing such a large-scale claim.

All things being equal

But no-one wants to pay men and women differently. So why are there so many cases? The difficulty comes when considering what counts as “equal work” for which men and women should be paid equally.

Taking the recent Asda Court of Appeal case as an example, the question for the court was whether employees working in their retail stores (which were mainly women) were entitled to compare themselves to employees working in their distribution centres (which were mainly men) so that they could bring equal pay claims. On the face of it, the roles of retail and distribution are different, have different skills and working environments and there are a number of obvious differences between them. However, that is no barrier to the courts finding that they are comparable (although they have not yet ruled on whether the work is in fact “equal”).

Are some roles more equal than others?

Roles in businesses evolve over time as a result of pay practices, market practice and business structures, without any deliberate discriminatory motivation. So practically, how does an employer know if two roles might be capable of comparison in the future?

The simple answer is that they can’t: it’s impossible for an employer to predict every claim that a disgruntled employee or group of employees might seek to bring. However, this needn’t be a counsel of despair: there are actions that employers can take.

The first is obvious: keep an eye on your competitors. It is easy to see where retailers should look first in the light of the claims referred to above: a comparison between distribution centres and shop floor staff. Similar approaches apply in other industries.

Secondly, consider getting out ahead of your prospective claimants by undertaking an equal pay audit, where external advisers assess your organisation for trouble spots and recommend remedial action. Done correctly, the report will remain legally privileged and will identify your areas of risk so you can consider fixing them.

Everything in equal measure

Whilst largely confined to retail sector at the moment, with the increased publicity there is potential for the spotlight to shine on other sectors. The current trend has been for shop staff to compare themselves to distribution staff, but in future might your HR director compare themselves to your IT director? Or might your customer support agents compare themselves to your branch staff?

Equal pay litigation is complex and gives rise to uncertainty for employers. In the absence of any sign of change in the law, employers shouldn’t simply wait for the wave to hit them. They should get in front of the problem as best they can by reviewing their work forces and considering where the charge of unequal pay for equal work might hit next.