Paying a heavy price

The recent high-profile case involving Birmingham City Council highlights why the time is right for a review of our equal pay laws, argues Kim Howell.

Notwithstanding the political fervour of the past couple of weeks, few can have failed to hear that more than 4,000 female workers at Birmingham City Council have succeeded in their equal pay claims. The question of how much “back pay” they should receive has yet to be determined and that could take some time yet.

The claimants understandably believe this to be a major victory and, in personal terms, it undoubtedly is. Indeed, the potential cost of funding this ruling in terms of compensation payable has been estimated by various sources to be anywhere between £30 million and £600 million.

Unison, when commenting on the outcome of the case, criticised the council for its expenditure on legal costs in the case on the basis that “this money would have been better spent on the provision of services, many of which are facing cuts”.

Unison’s position, however, perhaps fails to recognise that the law in relation to equal pay is notoriously “fact sensitive” and ever evolving and the cost/ benefit of winning or losing these cases so enormous, and potentially financially crippling for any public body, that simply conceding these sorts of liabilities is not usually an option. Indeed, it must be appreciated that last year, a broadly similar case against another Council, Sheffield City Council, was successfully defended. For these reasons, it is unsurprising that councils continue to strenuously defend these claims.

Indeed, regardless of who eventually ends up living at No.10, all public bodies are already facing a very uncertain future; they are bracing themselves to face unprecedented budget cuts and predict that cutting services will be unavoidable.

When looking at the sort of payouts that have been publicised in relation to the Birmingham equal pay case and the concern as to how this will be funded, this case is likely to have sent tremors through town halls throughout the country. However, concerns are not only limited to those in local government who will be responsible for redistributing increasingly scarce resources to fund these claims but are also being raised by the many who rely on council services and who fund them through council taxes.

Surely, the penny must have now dropped that the equal pay bonanza needs to be reappraised and brought into line with other rights under employment law, where a more proportionate approach is adopted in many respects.

Arguably it is the anomalous way that equal pay law is structured in the UK that accounts for many of the difficulties in resolving perceived pay inequalities, thereby exacerbating the problem. For example, can it be right that most other employment claims must be raised within 3 months of an issue arising when an equal pay claim can lie dormant for decades even when there has been no concealment of the pay differentials that are the subject of these claims?

Further, can it be right that the law appears to make no provision for taking into account the fact that the same unions that are now supporting these claims were often jointly responsible, with council employers, for selecting the type of jobs which could sustain bonuses arrangements. Those decisions were based on nationally regulated assessments of which roles could be restructured to achieve improvements in productivity and thereby generate the cost savings needed to fund any productivity payments.

Against that background it is perhaps difficult to reconcile some of the judicial findings in these cases. For instance, it is often held (as it was in the Birmingham case) that the decision to introduce bonus schemes for traditionally male dominated jobs but not for traditionally female dominated jobs must have been due to indirect discrimination, notwithstanding that it is often (and was in this case) accepted that most of the traditionally female dominated occupations, such as care assistants, are not capable of sustaining productivity arrangements because the nature of the work does not lend itself to be speeded up in the same way as that of, for example, a refuse loader.

Many would expect the above explanation to be sufficient to satisfy an Employment Tribunal that the reason for the different pay arrangements was the different nature of the work of the traditionally male and female groups rather than the gender composition of the respective workforces.

However, that seems not to be the case. On the contrary, there is an ever increasing focus by Tribunals on the fact that occupations in local government are typically staffed by predominantly men or women, and that this in itself is indicative of discrimination through gender stereotyping.

Such an assumption fails to recognise, however, that the gender composition of occupations is nothing more than the straightforward issue of personal choice. Although it might be the case that decades ago work opportunities for women with children were more limited, it is questionable whether this proposition is still sustainable. After all, we have enjoyed a decade or more of extended protection for the predominantly female part time workforce, for parents of young children through extended maternity and paternity leave, parental leave and flexible work opportunities for all.

This has revolutionised the work place and the range of career opportunities for women with children who want to work. Yet, this group is still regularly categorised in the case law as disadvantaged and assumed to have been unfairly assigned to low paid “female work” for reasons associated with indirect discrimination.

The fact that so many of the claimant jobs in local government are predominantly female was, in the Birmingham case, held to be sufficient to raise a presumption of discrimination for all female claimants, notwithstanding that some were employed in occupations that were actually, when the statistics were reviewed, predominantly male.

If correct, this approach would represent a significant broadening of the concept of implied indirect discrimination as the law was thought to be well settled by requiring separate consideration, for each job type, of the gender composition of the particular job groups if seeking to raise a presumption of discrimination based on the statistical evidence of gender imbalance alone. If it is possible to conclude that a predominantly female workforce must be indicative of indirect discrimination against all occupations, the repercussions for equal pay claims will be widespread in that every pay gap would have to be objectively justified when not related to gender.

Understandably, both parties in the Birmingham case will be assessing the outcome and considering whether to lodge appeals. Perhaps the broader issue is whether the time has come for our new government to seize the opportunity to urgently review our equal pay laws again and, this time, make the radical changes that are needed in this area.

To do so would present an opportunity to introduce a clear and proportionate set of rules that employers can understand, bring the time limit for making claims into line with those for other employment claims and introduce a compensation regime which is proportionate and affordable.

Unfortunately, the Equality Act represented such an opportunity but has been wasted in that the current Equal Pay Act has been largely re-enacted in its original form save for a few tweaks. Until we see major change in this area of law, it is difficult to envisage how protracted litigation can be avoided, thereby further exacerbating pressures on public sector finances at a time when there is unprecedented concern about security of public sector jobs and the scope and standard of public services that can be expected in future.

Kim Howell is a partner and head of the public sector employment team at Geldards (www.geldards.com). She can be contacted through This email address is being protected from spambots. You need JavaScript enabled to view it..