Do You Have a Pay Protection Scheme? Beware of Equal Pay Claims
Phased pay protection schemes that exclude groups within the workforce risk challenge under equal pay legislation. So what should employers bear in mind when implementing such a scheme?
What Does the Law Say?
An employee is entitled to receive equal pay to that of a comparator of the opposite sex in the same employment, if they can be said to be carrying out equal work (defined as like work, work rated as equivalent or work of equal value).
A Recent Decision - Glasgow City Council Equal Pay Claims
In this case, Female workers brought equal pay claims at Glasgow City Council.
The litigation centred around a Pay Protection Scheme introduced as part of an initiative to move all administrative, professional, technical and clerical staff and manual workers together under one pay scheme.
The pay protection was intended to compensate certain manual (and mostly male) workers who had lost their bonus as a result of the move towards single status for local authority employees. The women workers argued that the way in which the scheme operated was inherently discriminatory against them as it effectively excluded them from the scheme.
The Court of Session agreed with the employees. Whilst it was open to the Council to justify the use of the scheme, it could not do so because the scheme operated over the very lengthy period of 10 years.
Best Practice
- In order to establish a defence to a claim for equal pay, an employer must show that the difference in pay is "genuinely due to a material factor which is not the difference of sex".
- That material factor must be objectively justifiable. This means that it must be a proportionate means of achieving a legitimate aim.
- In its decision in this case, the Court of Session held that the matter to be justified was not the introduction of a Pay Protection Scheme but the exclusion of women from it.
- In order to objectively justify such decisions, an employer must be able to demonstrate that it gave serious consideration to the reasons for excluding certain staff groups at the time the scheme was put in place. These reasons should be well documented.
- Whilst the Court did accept that such a justification may be made out after the event (ie when challenged) it highlighted that this might be difficult.
- Pay protection schemes will generally be lawful provided they are implemented over a reasonable period of time. Although this may vary, a reasonable period is likely to be a lot less than 10 years.