Equal pay – employers' overview

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Health Assured team

26 February 2018

Equal pay legislation was introduced in the Equal Pay Act 1970 and consolidated into the Equality Act 2010. The purpose is to ensure that where women and men are doing equal work in the same employment, they should receive the same pay and rewards for it. The equal pay for equal work provisions of the Equality Act 2010 apply to all employers, regardless of size or sector. Equal pay is not a protected characteristic as such but the Equality Act provides that a person of one sex must be paid the same as a person of the other sex for the same job. The provisions only apply to contractual terms. However, if an employee's pay and benefits are not part of their contract, the employer must still not discriminate against them because of their sex. Discrimination in relation to a non-contractual payment, e.g. a discretionary bonus, could be a potential claim for unlawful sex discrimination, rather than an equal pay claim. Where a person shows that they are receiving less pay or other less favourable contract terms than a person of the opposite sex who does equal work, the employer will have to show why this is. If the employer cannot show that the difference is due to a factor that is not sex, then the contract terms must be modified so that the terms are equal. ‘Pay’ refers to financial and non-financial contractual terms, such as wages and salaries, non-discretionary bonuses, holiday pay, sick pay, overtime, shift payments, occupational health benefits, leave entitlements, access to sports and social benefits. Equal work is work that is: • ‘Like work’ - the same or broadly similar, provided that where there are any differences in the work, they are not of practical importance. • 'Work rated as equivalent' - different, but which is rated under the same job evaluation scheme as being work of equal value. • ‘Work of equal value’ - different, but of equal value in terms of factors such as effort, skill and decision-making.

Time limits for bringing a claim

If an employee wishes to bring a claim for equal pay in the Employment Tribunals, he or she must start the claim before the end of the “qualifying period”. Basically this means the claim can be made at any time during the employment to which the claim relates or, as a general rule, within six months of the date of termination.

Defence of material factor

A man and woman doing equal work in the same employment are entitled to the same contractual terms, unless the employer can show that there is a material reason for the difference which does not discriminate on the basis of sex. This is called the 'material factor defence', and the employer must prove: • It is the real reason for the difference in pay and not a pretence. • It caused the difference in pay. • It is material, i.e. significant and relevant. • It does not involve direct or indirect discrimination. Other defences are: • The woman and her comparator are not doing equal work. An indirectly discriminatory factor may be justified if the employer can show that it was a proportionate means of achieving a legitimate aim.

Good practice for employers

Employers should be encouraged to review employees' pay as this may be the most effective method of ensuring that a pay system is free from unlawful bias. An audit could take the following steps. 1. Decide the scope of the audit and identify the information required. 2. Determine where women and men are doing equal work. 3. Collect and compare pay data to identify any significant pay inequalities between roles of equal value. 4. Establish the causes of any significant pay inequalities and assess the reasons for them. 5. Develop an equal pay action plan to remedy any direct or indirect pay discrimination. If you are in any need of further advice on equal pay, Health Assured are here to help. Email counsellingadvice@healthassured.co.uk Portal www.healthassuredeap.com

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