Equal pay: recent challenges

In recent months we have seen various claims and challenges relating to equal pay in councils. In this article, we consider one of the key areas of risk; namely equal pay claims arising in connected with “otherwise unreliable” job evaluation schemes (JES) and what councils can do to mitigate the risks of equal pay claims arising in this context. 

This is certainly an area under the spotlight and one in which the unions are especially active. We have seen Birmingham City Council cite its equal pay liability as one of the factors leading to its effective bankruptcy and the issuing of two section 114 notices. GMB has also recently announced it would be launching a major equal pay claim against Sheffield City Council which centres of the use of its JES and, in July this year, the employment tribunal in Scotland issued its judgment in the matter of Allan and others v Fife Council in which it determined that Fife Council’s JES was “unreliable” (the Fife Claim).

Equal pay and job evaluation schemes – what’s the legal position?

Equal pay law operates by way of "equality clauses" (a “sex equality clause” or a “maternity equality clause”) which are treated as incorporated into every contract of employment. It should be noted that the equality clause operates to protect both sexes, so that a woman can complain that she is being paid less than a man, and vice versa. However, in this article we will refer to a woman claimant comparing herself with a male comparator.

The equality clause will apply where the woman is employed to do equal work to that of a man in the same employment. Equal work means ‘like work’ (i.e. the same job) ‘work rated as equivalent’ (under a valid JES) or ‘work of equal value’.

A valid analytical job evaluation study or JES can assist an employer to achieve a non-discriminatory pay system throughout its workforce and provide an absolute defence to equal value claims.

However, the introduction of single status and a valid JES does not avoid the risk of equal pay claims arising altogether. Here, the most significant risks are:

• “work rated as equivalent” claims under which a claimant’s role is given an equivalent rating to a comparator role but the terms are nevertheless not equal in some respect;
• “equal value” claims where the employee asserts that the JES is discriminatory or is "otherwise unreliable" and therefore does not provide an absolute defence to the claim.

As we explore in this article, it’s only where the integrity of the single status agreement and the JES is maintained that they will be effective in significantly reducing the longer-term risk of claims.

So, what’s the issue?

“Everyone thought they had done it . . . But if you take your eye off the ball discriminatory practices creep back in…”

These are the words of Rhea Wolfson (Head of National Equal Pay Department) of the GMB and they do rather neatly highlight the crux of the issue.

The implementation of single status and a valid and robust JES is not the end of the matter. On the contrary, it is just the beginning. 

In relation to “work rated as equivalent” claims, the risk is that there is slippage from written terms and policies.  This might mean payments are made when they shouldn’t be; for example, bonuses or overtime. Alternatively, informal arrangements or practices creep in. One such example which has been under the spotlight is the practice of “task and finish” whereby employees (often in services such as Waste where tasks may be more readily measurable by units, e.g. the collection of [x] bins) are permitted to go home once they have completed their tasks, regardless of whether they have worked their contracted hours. This effectively means they may be paid the same for working fewer hours than a comparator (for example, a cleaner who does not benefit from such a policy because their work is more “holistic”) so, in effect, they receive a higher hourly rate of pay.

In relation to “equal value” claims, the issue is generally that the JES is sound on implementation but becomes “unreliable” because of how it continues in operation once implemented. Decision making may not be undertaken at an appropriate level or by persons who are trained and authorised to evaluate and make grading decisions.  Other issues, noted in the Fife Claim, may include:

• inconsistent approach to evaluation, for example, some but not all jobs being credited with aspects of a job whether a job holder carried it out or not;
• inadequate scrutiny of decisions and failure to involve or consult with job holders or unions in respect of job facts/scope of roles actually undertaken;
• suspicious outcomes or other evidence of manipulation of scores. For example, a trend where jobs with a large number of employees who were predominantly female end up only a few points below the grade boundary, whereas male jobs end up a few points over the grade boundary. 

The tribunal in the Fife Claim also found there were serious transparency issues and failure to maintain accurate records of decisions made which completely undermined the job evaluation exercise and may have, of itself, been sufficient to render the JES “unreliable”. 

Where a JES is judged “unreliable”, the employer cannot rely it to defend an equal value pay claim. It does not necessarily follow that the claims will succeed. The next stage may involve the tribunal appointing an independent expert to carry out a further job evaluation exercise to see whether equal value is established or not. In such cases, it’s still possible that liability can be avoided if a “material factor defence” (i.e a good, gender neutral, reason for the difference in pay) can be shown. However, that’s very fact specific and employers will certainly be on the back foot if it’s been shown their JES is unreliable and/or their practices are inconsistent. Where there is a lack of evidence supporting decisions, employers will also struggle to persuade a tribunal there is a genuine material factor defence.

What can councils do?

When considering risk of equal pay liability, it is worth taking note of Rhea Wolfson’s salutary warning:

“If any local authorities are taking comfort in Birmingham being the exception — it is exceptionally bad, but we are finding this everywhere and you will see more of these campaigns and claims launching.”

Clearly, the unions are very much active in this area and this is unlikely to change any time soon, in view of the ongoing cost of living crisis.

Councils need to recognise that the introduction of single status a job evaluation scheme is not the end of the story and they must not, to borrow Rhea Wolfson’s phrasing, “take their eye of the ball”.

Councils therefore must ensure that the integrity of single status agreements and JES is maintained. This means robust processes in relation to job evaluation and allocation including ensuring continued scrutiny of grading decisions. 

Appropriate systems and processes should also be maintained to ensure the integrity of single status agreements and compliance with rules relating to the authorisation (or prohibition) of payments and allowances.

Adequate records of decision making (including rationale and contemporaneous evidence relied on) must be kept in order that councils can justify individual payments and rewards with reference to the single status collective agreement and related policies. Record keeping is also a fundamental part of evidencing a “reliable” JES.

Councils should consider pro-actively taking steps to understand the risk of any equal pay liability by way of an audit and address this where identified. 

In addition to regular pay roll audits to assess compliance with single status agreements and related pay and allowance policies, we would recommend councils consider undertaking regular consistency checks in respect of grading, and sampling. 

Some of the recent claims and focus of the unions is on certain traditionally female roles including in care work and teaching assistance which have changed markedly over time, but - they say - pay and conditions have not kept up. GMB has specifically highlighted, for example, that carers have in many cases moved from offering a relatively low level support role (undertaking errands etc.) to performing a substantively more involved, hands-on, physical role, even stretching to “clinical work” or palliative care. It may be job re-evaluation is actively pursued by affected employees, or the unions on their behalf. However there will be equal pay liability in relation to any period under which the roles have evolved but the job evaluation (and terms and conditions) is not updated to reflect this. In recent months we have seen various claims and challenges relating to equal pay in councils. In this article, we consider one of the key areas of risk; namely equal pay claims arising in connected with “otherwise unreliable” job evaluation schemes (JES) and what councils can do to mitigate the risks of equal pay claims arising in this context. It may be sensible in view of the unions’ position to prioritise review of these roles.

Sarah Lamont is a Partner and Charlotte Rose is a Senior Associate at Bevan Brittan.

If this resonates with you, join us for the Lawyers in Local Government half-day online Equal Pay training seminar on 12 December.