Equal pay - the issue that just won't go away

Consultant editor Darren Newman considers the reasons behind the huge increase in equal pay claims in recent years and the potential implications for affected employers.

On XpertHR this week we report the latest in the line of equal pay cases involving Redcar and Cleveland District Council. In Redcar and Cleveland Borough Council v Bainbridge and others [2007] EWCA Civ 929 the council sought to argue that it was legitimate to pay a predominantly male group of employees more than a predominantly female group of employees because a job evaluation study had placed the female group on a higher grade than the male group, not the same grade. Worth a try you might think, but the Court of Appeal had little difficulty rejecting the argument. In fairness to the council, this was not the main thrust of its case, which deals with issues around justification and pay protection for workers being downgraded by job evaluation, and will be heard by the Court of Appeal together with the appeal against the EAT decision in Middlesbrough Borough Council v Surtees and others EAT/0077/07.

This is an appropriate opportunity to remind ourselves of the sheer scale of the equal pay problem faced by local authorities up and down the country. In 2006/07 there were 44,013 equal pay claims brought before the employment tribunals. This is unprecedented. As recently as 2003/04 the number of claims was just 3,217. So what accounts for such a massive increase in such a short period? Almost all of the increase is down to the efforts of a small firm of solicitors based in Newcastle run by Stefan Cross. Cross saw that job evaluation exercises in the NHS and local government were revealing long-standing gender inequality in terms of pay, and bonus payments in particular. Employers and unions were struggling to rectify the problems and didn't seem to regard compensating potential equal pay claimants as their first priority. Cross stepped in and started representing employees on a no-win, no-fee basis, and this huge increase in the number of equal pay cases was the result.

The number of claims now being brought is causing an administrative problem for the tribunals. However, this pales into insignificance when compared with the financial impact of the claims that succeed. Suppose a case revolves around a £20 weekly attendance allowance paid to a group of largely male carpenters but not to a group of largely female administrative workers. That may seem like a modest sum, but if 1,000 employees lodge a claim - and that is about the number of employees covered by the Redcar and Cleveland case - the employer faces a bill of about £20,000 a week, or just over a million pounds a year. As the back-pay limit for equal pay claims is six years before the claim was submitted, and because equal pay claims can take several years to reach a resolution, the bill could easily reach £10 million.

In September 2007, the government announced that 46 councils would be allowed to borrow a total of £500 million to help them fund the equal pay claims they are facing. But even this may not be enough. Estimates of the total amount of back pay that may be owed across the country have put the figure as high as £5 billion. Some local authorities are facing a distinctly uncertain future.

In the same month, Jenny Watson, the last chair of the Equal Opportunities Commission, called for a "breathing space" for employers that are taking steps to put their equal pay house in order. This may seem a sensible solution, but it is difficult to see how any sort of moratorium could be put in place without contravening art. 141 of the Treaty establishing the European Community, which enshrines the right to equal pay. Workers who are not receiving equal pay are not entitled to have their employer think seriously about how to address the problem; they are entitled to be compensated for the legal wrong that has been done to them.

Cross is heavily criticised by some for undermining the collective bargaining process and hindering pay reforms that were designed, in part, to resolve long-term inequalities in pay. But if women are entitled to equal pay, and are not being given it, why shouldn't they take their complaint to the tribunal? That the inequality (albeit hidden) has been allowed to fester for so long that putting it right is incredibly expensive is not their fault. I suspect that Cross sleeps well at night - and in some comfort.

perspective@irsonline.co.uk