We use cookies to improve our site and your experience.

By continuing to browse on this website you accept the use of cookies.

Privacy Notice

The future of equal pay – will it be in the private sector?

The future of equal pay – will it be in the private sector?

One particularly interesting feature which appears to be changing in the general landscape is equal pay. Equal pay claims have historically been very well known within the public sector. They have been a feature of the landscape for over 20 years. It has not been unusual in the public sector for groups of female employees to bring claims they have been paid less than men. They argue that this is because of their gender compared with men (not always doing the same types of work). The effect of these claims can come at great expense to tax payers, often local tax payers. In the private sector, however, equal pay claims have been far less common. It is not entirely clear why.

Just over a year ago, 400 female shop staff at Asda launched a claim for six years’ back pay comparing themselves to higher paid male distribution centre workers. These sorts of claims by large groups of individuals are relatively common in the US, but this was the first claim of this type in the UK in the employment field. In the consumer sphere the recently enacted Consumer Rights Act 2015 has made it easier for businesses and consumers to obtain compensation by promoting collective proceedings on behalf of groups of claimants. This is in the competition sector and applies particularly  to consumer rights. Collective proceedings are a type of class action in which a claim is bought by a representative on behalf of a certain category of claimants. There are two types of collection action where you either opt in or opt out of the group bringing the claim. Previously only the opt-in collective action was permitted, but under the new legislation the opt-out collective action is now also possible. This new Act does not have a direct effect within the world of employment. However, it will be interesting to see whether it will affect the cultural landscape in which we operate and that individuals will be much more likely to bring collective claims.

If that is the case it may well be that the types of group action which were launched last year against Asda may become a much bigger feature of the UK employment law. Those in the private sector who have looked on in amazement at very significant pay-outs to groups of public sector employees may do well to make sure that their own practices in terms of differential pay between gender groups are not a cause for concern.

On a positive note the data collected by Eurostat, the European Union Centre for collecting EU Data on the gender pay gap demonstrates that whilst this gap was at 27.3% in the UK in 2002 it had fallen to 19.7% by 2013. Interestingly a similar fall was seen in Slovakia, from 27.7% to 19.8%. In Cyprus in 2002 the gender pay gap was 22.5% falling to 15.8% in 2013. It is perhaps interesting to note that in Germany the figures have been much more static. In 2006 the gender pay gap was around 22.7% falling to 21.6% in 2013. These are unadjusted figures and the reasons underlying them are ones that are hotly debated. It also worth noting that the recent publication of the Davies Review looking at Gender Equality on boards has now set a voluntary target for women’s representation on FTSE 350 boards to be at the level of 33% within the next 5 years.

It is clear that the workplace balance is changing. Private sector employers should be aware that the landscape is volatile and that big equal pay claims can be time-consuming, damaging and take a business away from its core aims. Employers would be well advised to make sure their policies and practices minimise the risk of any such Asda- type claims.