By Peta Fluendy
A recently released 71 page Draft Code of Practice on Equal Pay might well cause some knitted eyebrows – and even the odd protruding lower lip.
Some employers have been ignoring existing equal pay legislation for 40 years, of course. They pay females less by attaching less kudos to their roles and by using contracts to stop staff from discussing and comparing pay. Recent case law, such as where cleaners successfully proved they should be on the same pay scales as say dustmen or gardeners, might cause temporary squirming for employers, but on the whole the pay gap remains.
So how does the new draft code fit in? The draft code is intended to provide guidance about how the Equality Act 2010 will affect equal pay claims and what employers must do to ensure their pay schemes are transparent and fair. The reason for the baffled hostility, which some employers will exhibit, is that the only things in the draft code which is easy for small businesses to understand is that the draft code definitely affects them and it will definitely come into effect on October 1st.
The first confusion is that the draft code describes itself as a “statutory draft code.” Despite appearances, this does not mean it contains any legal obligations for employers. The draft code is merely intended to shed light on the legal obligations set out in the EA 2010.
Some may imagine that the idea that men and women doing equal work are entitled to equal pay ought to be pretty simple. This is not so. Employers must familiarise themselves with three different ways of determining what equal work means. There is “like work” which means employees have similar job functions without material differences. Then there is “work rated as equivalent” which is where an employer’s own job evaluation process gives an employee the same status as another colleague who has a different role – for example secretaries being on the same level as telesales staff. And finally there is “work of equal value” – which is where two job functions might be completely different but will need similar levels of effort, skill and decision making ability.
Employers would be well advised to carry out an audit of different job functions to clarify exactly how different roles might be counted under the three definitions of equal work.
Bosses will no longer be able to rely on staff being unaware of what colleagues are paid – because gagging clauses in employment contracts, which prevent staff from disclosing their pay to each other, will become unenforceable. This will probably mean many will face claims.
But the draft code also provides some useful pointers about how a company can defend itself from an equal pay claim. It is an obviously good idea to have these defences in mind when re-evaluating and structuring transparent new pay scales.
Companies can defend pay differences by saying there is a “material factor” to justify them. They could say, for example, that there is a skills shortage in one job – meaning pay has to be higher. Other factors might be unsociable hours for shifts or geographical, such as London weighting. They will, however, have to prove that this defence is true and not a sham excuse for discrimination.
Another defence is to show that some pay discrepancy is a proportionate means to a legitimate end. For example an employer can pay more for a night shift – to attract workers. It will not be discriminatory even if most of the night shift is male. Again the draft code provides scenarios where this defence might work.
>> The draft code is here:
http://www.equalityhumanrights.com/uploaded_files/EqualityAct/equal_pay_draft code_final.pdf
>> Peta Fluendy is employment law consultant at Sutton based De Brett and Co’s
http://www.iambeingfired.co.uk/
Tags: Ask an Expert, employment law, equal pay, Peta Fluendy, small business, SMEs
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