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Landmark legal battle that could prevent women earning less than men in the UK

The latest hearing in the UK's largest ever private sector equal pay claim is due to kick off today, in a case that could eventually see around 15,000 predominantly female Asda workers recovering well over £100m in pay.
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Landmark legal battle that could prevent women earning less than men in the UK

Ethnicity Facts and Figures

On Tuesday 10 October 2017, the Government launched a new website – Ethnicity Facts and Figures – the aim of which is to challenge society to “explain or change” disparities in how people from different ethnic backgrounds are treated.
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Ethnicity Facts and Figures

EAT finds that Asda retail store workers are comparable to higher paid distribution workers

The EAT upheld the previous Tribunal ruling that female employees who work in Asda's retail stores are entitled to compare their work to that of the higher paid male employees that work in its distribution centres. The EAT agreed that the value of work between these two groups of staff is of equal value and, therefore, that their pay should be comparable.
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EAT finds that Asda retail store workers are comparable to higher paid distribution workers

Can employees doing different work bring their equal pay claims on the same claim form?

In the recent decision of Farmah & ors v. Birmingham City Council & ors, the EAT held that claimants could not bring equal pay claims on the same ET1 form where they were carrying out different work. Rule 9 of the Employment Tribunal Rules 2013 (the Rules) states that two or more claimants “may make their claims on the same claim form if their claims are based on the same set of facts”.

Three of the appellants were retail staff doing different jobs in supermarkets and claiming that they were performing equal work to men working in distribution centres. The women all included their claims in the same claim form. Some of the affected men argued in the same ET1 that, if the women were successful, they did equal work with the female claimants. The remaining two appellants undertook different jobs in local government and claimed their work was equal to that of men performing a variety of jobs. The respondents argued that the claims should be struck out on the basis that they did not comply with Rule 9 of the Rules.

The EAT found the fact that the claimants were performing different work and, even if based on the same comparator, did not satisfy the definition under Rule 9 of the Rules. Therefore, the use of a single claim form was in breach of Rule 9. Under Rule 6 of the Rules, wrongly including claims by two or more claimants in the same claim form is an irregularity and the Tribunal is a permitted to “take such action as it considers just” as a consequence, up to and including striking out the claims.

The full case report can be found here: Farmah & ors v Birmingham City Council & ors.

Can employees doing different work bring their equal pay claims on the same claim form?

The irregular thing about the Gender Pay Regulations…

As reported in our article “It’s all change in employment law in April…”, private employers with 250 employees or more should have collated their relevant data on the first annual “snapshot date”, on 5 April 2017. These employers must publish their calculations by 4 April 2018. Public employers’ “snapshot date” was 31 March 2017 and they must publish their calculations by 23 March 2018.

However, now that the process of calculating the key pieces of information has begun, many employers are realising that their figures reveal a significant (and often unexpected) pay gap. While the aim of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the Regulations) is to address the UK’s gender pay gap, the reality behind the figures published will not always paint an accurate picture. The figures may demonstrate a demographic gap, rather than an equal pay gap. For example, the cause of a gender pay gap may be the result of a greater distribution of men in higher paid roles, rather than a disparity in equal pay. However, just because data reveals a demographic gap, it does not mean that this is not something which the government is trying to address. The Regulations attempt to deal with this issue through the inclusion of quartile calculations.

Where employers’ data reveals that there is a gender pay gap, many employers will assert that they pay their employees in a non-discriminatory manner and try to justify the disparity as being a result of the workforce demographic. However, even where employees receive equal pay, the results do not remove the risk that there are other discriminatory factors causing the disparity. For example, while an employer’s pay gap may be a product of how its workforce is spread across the business, this might be a result of discrimination on a different level, such as against females applying for senior positions. Alternatively, there may be other sufficient reasons for a gender pay gap, such as a shortage of qualified men or women in a certain industry. Therefore, the calculations may go a long way to emphasise the issues that companies continue to face and could provide an impetus on employers to deliver a solution.

This is where the optional narrative can be an important element of employers’ publishing obligations. This is an opportunity for employers to provide a commentary on the figures published and pacify any reputational risk that might arise from publishing the headline figures alone. It is quickly becoming more widely understood that the Regulations do not in fact deal with equal pay but this does not mean that the government is not taking steps to tackle other factors that are causing a gender pay gap. Therefore, employers have the opportunity to use their narratives to acknowledge the issues they continue to face and offer a way forward to improve these problems in conjunction with the government’s efforts. By doing so, any pay gap may be explicable and employers can be seen to be responding to the results proactively. This in turn might potentially minimise the risk of adverse publicity or internal grievances raised by employees.

The irregular thing about the Gender Pay Regulations…

New ACAS Guidance on gender pay reporting

With the commencement of the gender pay reporting obligations in April, ACAS have provided a helpful summary (as well as more detailed guidance) on the regulations.

By way of brief reminder, the regulations require that employers with 250 or more employees annually publish calculations that show the gender pay gap between their male and female employees. The calculations that need to be published are:

1. Average gender pay gap as a mean average;
2. Average gender pay gap as a median average;
3. Average bonus gender pay gap as a mean average;
4. Average bonus gender pay gap as a median average;
5. Proportion of males receiving a bonus payment and proportion of females receiving a bonus payment; and
6. Proportion of males and females when divided into four groups ordered from lowest to highest.

These calculations must be published (both on the company website and on a government website) within 12 months of the snapshot date (5 April each year). Companies may include a narrative explaining the calculations. This is an opportunity for companies to set out the challenges that they face, the success they’ve had, and/or set out their long terms plans to close the gender pay gap.

For further detail please click here to see our previous article on the revised regulations and click here to see the ACAS Guidance.

New ACAS Guidance on gender pay reporting

Revised draft Equality Act 2010 (Gender Pay Gap Information) Regulations: Key points

The government has published the much anticipated revised version of the draft Equality Act (Gender Pay Gap Information) Regulations. The key points to note are:

  1. The draft Regulations are due to come into force on 6th April 2017.
  2. The snapshot date will now be 5 April each year (rather than 30 April). Gender pay gap information will need to be published within 12 months, meaning that the first reports are due by 4 April 2018.
  3. The definition of “relevant employees” has been clarified and means “a person who is employed by the employer on the relevant snapshot date“. This is to include both workers and employees. There is, however, an exception to the duty to report for employees who are employed under a contract personally to do work where “the employer does not have, and it is not reasonably practicable for the employer to obtain, the data“.
  4. Only “full-pay relevant employees” need to be included when calculating the relevant gender pay gaps. This is to combat the distortion in figures that relevant employees who are being paid at a reduced rate or nil, as a result of being on leave, would cause. Leave includes annual leave, maternity leave, paternity leave, shared parental leave, sick leave and special leave.
  5. The updated Regulations have clarified how “gross hourly pay” should be calculated. This should be calculated by reference to an employee’s normal hours, however where no such normal hours are kept, a 12-week reference period should be used.
  6. There are two points to note in relation to bonus pay:
    1. bonus pay is still to be included in the calculations, however under the revised regulations only the portion of the bonus payment that is proportionate to the relevant pay period should be included when calculating gross hourly pay; and
    2. bonuses paid in the form of securities, securities options and interests in securities are to be treated as paid at the point that they would give rise to taxable earnings.
  7. Quartiles are to contain equal numbers of employees. To create quartiles, employers should rank all relevant employees in order of their hourly pay (low to high) and then divide the employees into four equal groups.
  8. Previously, the Regulations and guidance were silent as to what penalty might be applied in the event of non-compliance. However, the Explanatory Notes now state that a failure to comply with the reporting obligations could constitute an “unlawful act” under the Equality Act 2010. This means that the Equality and Human Rights Commission could take enforcement action.
Revised draft Equality Act 2010 (Gender Pay Gap Information) Regulations: Key points

Insight: UK Employment Law Round-up – November 2016

Employment Round Up THUMBNAIL In this issue we look at a recent Court of Appeal decision focusing on sexual orientation protection following a refusal to bake a cake decorated with a gay rights message. We also look at the rights of breastfeeding mothers at work, and Asda’s equal pay claim case, which may lead to further claims against Asda. We consider Tribunal decisions deciding employment status and rest break rights. We review the importance of having clear guidelines on job descriptions, and proposals to provide an entitlement to bereavement leave. Finally, we give an update on changes to the Immigration Rules.

Read the full newsletter here.

Insight: UK Employment Law Round-up – November 2016

Women now “working for free” until the new year

Gender inequality has been at the heart of the government’s agenda for 2016. However, despite the excitement of Christmas beginning to build, the stark reality of the ever-present gender pay gap is still a concern for many, especially today, on Equal Pay Day. According to the Office for National Statistics, the UK has a gender pay gap of 13.9 per cent for those in full-time roles. This means that from 3.34pm today (Thursday 10 November 2016) women will in effect work for free for the rest of the year.

This is not something that is solely affecting British women. Last month women in Iceland walked out of their workplaces at 2.38pm, 17 per cent earlier than usual, to demonstrate the practical disparity in pay between them and their male counterparts. Similarly, on 7 November 2016, women across France were encouraged to leave work at 4.34pm to protest against the issue with gender pay.

The issue of pay parity is a long-standing one. As far back as 1968 the sewing machinists who stitched the seats for Ford cars campaigned for equal pay by going on strike. On their return to work, the women’s pay increased by seven per cent to 92 per cent of the male pay rate. Many consider that it was this strike that instigated the introduction of the Equal Pay Act in 1970.

Though the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 are not yet in force, the Government Equalities Office envisages that these will be published by the end of the year, with the first pay period for the largest employers’ review beginning in April 2017. Although this legislation has not yet been published, we encourage employers to look at their pay practices in advance so that they can be ready for publication of the data from April 2018.

Meanwhile, for more information on gender pay gap reporting, and the practical steps employers can take in preparation, see our February UK Employment Law Round-up.

Women now “working for free” until the new year

Asda equal pay claim: comparator successfully established

A decision by the Manchester Employment Tribunal at a preliminary hearing, in what is the largest ever private-sector equal pay case, has opened the floodgates for a wave of claims against Asda.

Under UK legislation, female employees are entitled to enjoy contractual terms that are as favourable as those of a male comparator, if they are employed in jobs of equal work. The key issue in the Asda case is whether the supermarket’s in-store staff roles, which are mainly held by female workers, are of equal value to higher-paid jobs in its male-dominated distribution centres.

At the preliminary hearing, the Tribunal had to determine whether the Asda store workers could compare themselves to the distribution workers for the purposes of an equal pay claim.

Under section 79 of the Equality Act 2010, an equal pay comparison is only valid between the claimant and a chosen comparator if they are both employed by the same employer and work at the same establishment; or if they are both employed by the same employer and work at different establishments but ‘common terms apply at the establishments’.

Asda sought to argue that the sets of employees were not comparable as they were based in different locations with different pay arrangements, and that the pay differentials reflected market rates. However, the Tribunal was not convinced by this argument and held that the statutory test was met and, as such, that the distribution workers are a suitable comparator.

This ruling will now mean that the test case can proceed and will clear the way for over 7,000 claims currently in waiting to follow. The claimants in these cases are seeking rectification and compensation for historic discrimination, and it is estimated that the total value of the claims could exceed £100million.

Whilst this is just a decision in respect of a preliminary matter, and we will be keeping a careful eye on the test case as it unfolds, the decision is likely to impact on other employers in the retail space, as the disparity between shop floor staff and warehouse staff is not unusual.

In light of this preliminary ruling, employers may wish to reassess how they carry out job-evaluation across the whole of their business; and ensure that equal pay considerations are kept in mind cross-establishment.

Asda equal pay claim: comparator successfully established