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Tribunal Orders Employer to Pay £2 Million in Compensation and Carry Out Equal Pay Audit

on Thursday, 24 March 2022.

In the case of Macken v BNP Paribas London Branch, the Employment Tribunal has awarded significant compensation to the Claimant, and ordered her employer to carry out an equal pay audit.

Millions Awarded in Compensation

Ms Macken has been employed by BNP Paribas London Branch (the Bank) since 2013. Her starting salary was £120,000, compared to a male colleague in the same role who was on £160,000. In her first four years of employment, Ms Macken's male colleague received more than £167,000 in bonuses whilst she received £33,000. Ms Macken was also routinely belittled by her male colleagues, who would respond to her attempts to communicate with "not now, Stacey" and who on one occasion left a witch's hat on her desk, amongst other incidents.

Ms Macken continues to be employed by the Bank, but due to illness has not worked since July 2018. She has been receiving 70% of her salary payments under the Bank's PHI scheme since then. Between 2017 and 2019, Ms Macken brought successful claims against the Bank for equal pay, direct sex discrimination and victimisation.

The remedy hearing for the claims took place in March 2021 and the decision has recently been handed down, having taken over six months to write due to its complexity.

The Tribunal awarded Ms Macken a total of £2,081,449.70 in compensation, including for equal pay, personal injury, future earnings, an injury to feelings award, aggravated damages, plus adjustments and an ACAS uplift.  

When Would the Tribunal Order an Equal Pay Audit?

Under the Equality Act 2010 (Equal Pay Audit) Regulations 2014 (the Regulations), Tribunals must order employers (save for micro-businesses and new businesses) who have been found to be in breach of equal pay law, to carry out equal pay audits save for where: 

  • an audit has been carried out within three years of the Tribunal's judgment
  • it is clear without an audit whether action is required to prevent further breaches from occurring or continuing
  • the Tribunal has no reason to think there may be other equal pay breaches
  • the disadvantages of a breach would outweigh it benefits

Whilst the Bank had established its own remediation programme in relation to equal pay, the Tribunal commented it was not provided with enough information on the methodology or comparative processes followed in relation to the equal pay exercise, and nor did the exercise consider bonuses. The Tribunal noted that the Bank retained "an opaque pay system" and that its pay policies and practices fell significantly short of the recommendations contained in the Employment Statutory Code of Practice and the Equal Pay Statutory Code of Practice issued by the EHRC. On this basis the Tribunal considered itself bound to order the Bank to carry out an equal pay audit.

What Information Must the Equal Pay Audit Include?

In line with the Regulations, the audit must identify any differences in pay between men and women and the reasons for those differences, explain the reasons for any equal pay breach identified by the audit, and confirm the Bank's plans to mitigate any such breaches.

Although the Regulations do not specify the methodology to be used, the Tribunal noted it expects the Bank to adopt a sophisticated analysis in its audit report which explains the Bank's approach to all elements of remuneration, including base pay, pension contributions, discretionary bonuses and any other allowances, but excluding benefits in kind. The Bank was given 6 months to produce the report.

What Are the Key Learning Points for Employers?

This case is significant because of the extremely high compensation awarded to Ms Macken. However, it is worth placing the value of the claim in the wider context of Ms Macken being a high earning employee whose pay discrepancies compared to her male colleagues were stark, and who is now incapacitated for the purposes of the PHI scheme, until retirement.

The case is also noteworthy because it is thought to be one of the first cases where the Tribunal has ordered an employer to carry out an equal pay audit. It provides a good demonstration of the circumstances under which an audit will be ordered, and the standards the Tribunal will hold employers to when considering whether any remedial action taken to date is sufficient to negate the requirement to order an audit to be carried out. The fact that the Regulations require an audit to be published on the employer's website for three years means that other staff may be awaiting the audit results with interest.

If you need more information or advice, please contact Mark Stevens in our Employment Law team on 0117 314 5401, or complete the form below.

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