Equal pay is a hot topic. This is partly because of gender pay gap information from a number of well-known companies, but the main impetus has come from the disclosures by the BBC about the pay of its highest paid ‘on-air’ staff.
It is great that so many people, especially employers and their workers, are thinking and talking about equal pay. However, suggestions that the law is simple do not help employers and their staff to resolve their equal pay issues, especially when those suggestions are made by outsiders in relation to a particular organisation and its staff. Here are some of the mistaken views which have been propagated in recent weeks:
‘A large gender pay gap is proof of unlawful discrimination in pay’.
Wrong. The gender pay gap can be a good indication that there are issues which need to be addressed, but in many cases the problem is a predominance of men in senior management or other highly paid jobs - which may be caused by discrimination in recruitment or promotion, or may be caused by other factors. The case of EasyJet shows the danger of a simplistic approach. They have reported a huge pay gap of 51.7%, but a key factor is that their pilots are paid more than most other employees and 94% of the pilots are men. The job of an airline pilot has not traditionally been considered a job for women. EasyJet employ more women as pilots than the industry average and they have adopted targets to take on many more.
The BBC’s gender pay gap report for people on staff contracts is not as dramatic as EasyJet’s, but it suggests that 7.5% of the headline figure of 9.3% is caused by the gender job split. There are more women than men in the jobs at the lowest grades and more men than women in the jobs at the highest grades.
‘It is illegal to pay a woman less than a man for doing the same job’.
Wrong. Comparing the jobs is only a starting point. Employers are entitled to pay a man more than a woman (or a woman more than a man) for like work (or work of equal value or rated at the same grade) if the difference in pay is explained by a material factor which does not involve direct or indirect sex discrimination. Sir Patrick Elias (a highly respected and independent former President of the Employment Appeal Tribunal (EAT) and former Court of Appeal Judge) reviewed the equal pay audit which was carried out for the BBC last October. In that review (which is a public document) he gave a very clear exposition of the relevant principles and several examples of factors which may afford non-discriminatory explanations for pay differences - seniority, flexibility, responsibility, greater productivity. He also pointed out that market forces may be relied upon, not where they reflect traditional practices of paying more for certain jobs done mainly by men, but where there is a need to attract staff with particular skills which are in short supply. The audit itself referred to additional factors, such as knowledge, specialist skills and experience (which is not the same as seniority but can overlap). The explanation only needs to be genuine in order to show an absence of direct discrimination. Where, however, women (or men) are placed at a ‘particular disadvantage’, the possibility of indirect discrimination arises. The employer needs to show that the relevant measure is a ‘proportionate means’ of achieving a ‘legitimate aim’. These are complicated issues which cannot be reduced to slogans.
‘Direct discrimination (including unconscious bias) still causes most pay inequality’.
The evidence suggests not. It is of course true that direct discrimination occurs when one person is paid less than another because of a difference of gender, whether or not that reason is consciously articulated, but by now most employers (especially those with access to HR advice) are well aware of the need to guard against sexist assumptions. When I was sitting as an employment judge in Newcastle, equal pay was almost our staple diet. I dealt with only one case where the issue of direct discrimination was even raised (and even then, it was raised unsuccessfully). The issue of indirect discrimination, on the other hand, was at the heart of every case, except those where jobs were found not to be of equal value.
‘It is unlawful to correct pay inequality by equalising downwards’.
Wrong. Levelling down does not resolve back pay claims, but it is consistent with the Equality Act to achieve equal pay for the future by reducing the comparator’s pay. It is however necessary to handle pay cuts carefully, usually with the benefit of legal advice, in order to avoid breach of contract or unfair dismissal claims. The usual outcome in those local authority bonus claims which succeeded was for the men to lose their contractual bonuses and not for the women to be awarded the bonuses for the future (subject to some rather complicated issues surrounding pay protection).
‘The law requires transparency in pay’.
No, but it’s a jolly good idea for employers to have at least some transparency in their pay arrangements. At the most basic level, if employers can’t understand their own pay arrangements and explain them to to a tribunal, they will find it difficult to show an absence of direct discrimination. They may also be found to have stumbled into indirectly discriminatory arrangements. It is also good practice to have a coherent pay structure and to explain to employees where they sit in that structure and how they can progress. Employers in general are not however obliged to tell employees how much their colleagues earn and there could be data protection issues if they volunteer that information without the colleagues’ consent.
The BBC has of course gone much further in terms of transparency by disclosing the names and pay bands of its most highly paid on-air staff. The information was given not only to the rest of the staff but also to the public. The disclosure was not a voluntary one but was made under a specific duty placed on the BBC on the renewal of its charter, reflecting government concerns about the use of public money to fund very large salaries.
The BBC has consequently found itself in the unenviable position of addressing equal pay concerns in the glare of publicity and joining the rest of the media in reporting on its internal affairs. The broadcaster has chosen to go further down the transparency road by publishing two independent equal pay audits of the organisation, including a recent one relating to presenters, editors and correspondents, and by publicly accepting recommendations to modernise its pay systems. It is talking to staff about their individual concerns.
It remains to be seen whether the BBC and its staff will be able to resolve all their equal pay issues by discussion and agreement rather than through litigation which could go on for years. If they succeed in doing so, then perhaps other employers will embrace more transparency in their pay arrangements. But a peaceful resolution will not be assisted by ill-informed sniping from the sidelines.