Equal pay

Legislation requires, in certain circumstances (see below), equality in contractual terms and conditions of employment (including rates of pay and pensions) for men and women.  The rules described here are one part of the laws to eliminate discrimination because of sex.

Contracts of employment are deemed to contain a sex ‘equality clause’ and occupational pension schemes a ‘sex equality rule’.  Each secures equal pay/pensions if a female and a male are both employed:

  • ‘in the same employment’, that is, in the same ‘establishment’, or in another establishment of the same (or an associated) employer, where common terms and conditions are applied either generally or to relevant employees, and
  • are also engaged
  • ‘on like work’, which is work of the same or a broadly similar nature and if the differences in frequency, nature and extent are not of practical importance;
      • ‘on work rated as equivalent’, such rating being by a job evaluation study under various headings of demands made.  If the method of job evaluation has treated men and women differently under any heading and but for this a woman’s job would have been given equal value, the work may be rated as equivalent; or
      • ‘on work of equal value’, if the demands made on an employee under, for instance, such headings as effort, skill and decision-making are determined by a tribunal to be of equal value to those made upon an employee of the opposite sex, even though the work is not ‘like work’.
  • Possible defence
  • The employer will have a defence if it can demonstrate that the variation in the compared employees’ terms is due to a material factor:
  • that does not involve treating one less favourably because of his or her sex; and
  • if it nevertheless puts the claimant’s sex at a relative particular disadvantage, that is still objectively justified (as being ‘a proportionate means of achieving a legitimate aim’).

Monitoring and enforcement

Individual enforcement and remedy are normally through application to the employment tribunal for a declaration of rights and (except in cases of equal treatment for pensions) for arrears of remuneration or for damages normally covering six years (or, in Scotland, five years).  For pensions, the employer is under a duty to provide the pension scheme with the necessary funds to ensure equality.

Where an equal pay claim is successful, the tribunal must also order the ‘losing’ employer to do an equal pay audit, to identify and explain any other differences in pay for men and women and to set out its plans for avoiding further breaches of the equal pay laws.  There is a fine of up to £5,000 for failing to do an audit.

A claim for equal pay to the employment tribunal must normally be made within six months of the end of employment.

However, an action for equal pay (breach of the statutorily implied ‘equality clause’ – see above) is possible in the ordinary courts, where the time limit for bringing proceedings is six years (of the alleged breach, not the termination of employment).