In commemoration of the Equal Pay Act’s 50th anniversary, ACAS has published updated guidance on Equal Pay.
Over the last couple of years we have had an increasing number of enquiries relating to Equal Pay. In part, this rise could be attributed to the requirements from 2017 for organisations with 250 or more employees to report on their gender pay gap. When gender pay gap figures were first reported we saw lots of references to ‘Equal Pay’ in the context of the gender pay gap.
The two are in fact entirely different things. The gender pay gap is the difference between the average earnings of men and women, whilst Equal Pay is the term used to reflect that men and women in the same employment performing like work or work of an equal value, must receive equal pay.
It not illegal for an organisation to have a gender pay gap, whilst it is contrary to legislation to pay male and female staff performing like work or work of an equal value differently, unless there is a material reason for this difference that is unrelated to sex. The gender pay gap is not always a reflection of a lack of equal pay. For instance, many of our care clients may have a large gender pay gap if they have a number of men in senior roles, whilst their front line care staff are predominantly women. This does not mean they also have an equal pay issue if their male and female staff are remunerated in the same way when performing like work or work of an equal value.
As set out above, whilst organisations with more than 250 employees have a reporting requirement to publish their gender pay gap data, we draw your attention to the requirements being suspended this year due to COVID-19.
ACAS’ Updated Guidance for Employers
1. Equal pay and the law
In its guidance, ACAS gives an overview of the equal pay provisions of the Equality Act 2010.
In summary, this includes the fact that equal pay law applies not only to pay, but also to terms of employment. Employers should therefore be alert to the fact that men and women performing equal work should receive the same basic salary and wages, pension, working hours, annual leave allowance, holiday pay, overtime pay, redundancy, sick pay and performance related pay such as bonuses and benefits. Equal work includes ‘like work’, work where the job and skills are the same or similar; ‘work rated as equivalent’ usually by means of a fair job evaluation; or ‘work of equal value’ i.e. work which is not similar but the level of skill, training, responsibility or demands of the working conditions are of equal value.
ACAS recognises that there are some circumstances where the difference in pay is permitted. For example where a person of the opposite sex is paid more due to the location of their work, the shift patterns they work or the qualifications they have. This is called a material factor defence.
2. Reducing the risk of unequal pay
In order to reduce the risk of equal pay claims, ACAS considers it good practice for employers to:
- have an equal pay policy;
- have up to date job descriptions that accurately describe the work that staff do;
- make sure that men and women who do the same work do not have different job titles; and
- be consistent when deciding on pay and contractual terms and conditions, for example have one pay structure for the business and limit who can decide on salaries for new employees.
ACAS also recommends employers carry out equal pay audits to check for equal pay issues and provides further guidance on its website for employers, based on the size of their organisation.
Although ACAS’ guidance is not binding in law, it provides a good framework of the law relating to equal pay and useful recommendations on how to reduce the risk of equal pay claims.
If you need help in reducing the risk of an equal pay claim, assistance in determining whether your organisation is at risk of an equal pay claim, or advice on how to defend against an equal pay claim, then please contact a member of the Employment & Pensions team or call 020 7880 4263.