The deadline for gender pay gap reporting is fast approaching and a recent BBC report suggested that two thirds of firms are still yet to publish their figures. Whilst the regulations requiring reporting have faced some criticism for not having enough teeth in terms of enforcement, the Equality and Human Rights Commission (EHRC) does have some limited enforcement powers and says it will be "fully enforcing" the pay gap legislation and will write to companies that do not report by the deadline. Potentially, firms could face an unlimited fine if they continue to fail to publish the figures.
The media and public interest in reporting figures, particularly those of well-known names, also highlights that the PR and brand impact of poor reporting should not be underestimated. The recent BBC article contains a calculator for finding out the gap for businesses that have already reported and states that, currently, the figures show that 76% of companies pay men more than women.
In addition, it is important to remember the legal context of gender pay gap reporting. There has been the right to bring a claim for equal pay for nearly 50 years since the enactment of the Equal Pay Act 1970. However, despite this right, the pay gap remains on average at 18.4% according to ONS figures last year. The main motivator for gender pay gap reporting was to increase transparency and shine a light on pay inequality to bridge the pay gap. As pay gaps become clearer in organisations, it is likely that there will be more equal pay claims across all sectors. However, the issue for the retail sector in particular, is that it has already been subject to equal pay challenges with the law firm Leigh Day bringing hundreds of claims on behalf of female workers at some of the UK's largest supermarket chains, including ASDA, Morrisons, Sainsbury's and most recently Tesco claiming that they have been paid less than their male colleagues.
These multiple claims, if successful, could see compensation pay-outs of billions of pounds. In this article we consider the basis for the supermarket claims and the potential knock on effect they could have for the retail sector as a whole.
What does the law say?
The Equality Act 2010 ("EqA 2010") now sets out the law in relation to equal pay and very broadly it implements the principle that men and women should receive equal pay for equal work. It would be rare in this day and age to come across an employer who had a policy of paying men and women differently for exactly the same job. The much more common scenario is where men and women are doing roles that have a different job title or description, potentially in different parts of the business, but nevertheless overlap in terms of skills, knowledge and value of the work.
The law accounts for this by providing for three types of equal work:
- Like work, where the jobs are the same or broadly similar,
- Work rated as equivalent, where a job evaluation is conducted to compare the roles (most typically seen in the public sector although this is becoming more commonplace in the private sector), and
- Work of equal value, where the jobs are equal in terms of the demands made on the claimant, with particular reference to factors like effort, skill and decision making.
In the various supermarket claims, women were mostly employed in retail roles and men were mostly employed in the warehouses or distribution centres, but the warehouse jobs attracted significantly higher hourly rates of pay. The women are therefore seeking to argue that the roles are of 'equal value', even though they are often performed in different locations and have different job descriptions.
This is a basic overview of the law as it relates to equal pay claims. However, at what first appears to be a very simplistic principle of 'equal pay for equal work', can actually be incredibly nuanced and complex, as demonstrated by the "supermarket claims".
Supermarket Claims - ASDA
The equal pay claim against Asda kicked off in April 2014 when the law firm Leigh Day put out a call asking for Asda retail workers, past and present, to come forward and join a claim for equal pay. They were contacted by over 19,000 workers as a result and they issued proceedings in the employment tribunal on behalf of many of them.
Similar equal pay claims are now also being brought against Tesco, Sainsbury's and Morrisons, but the Asda claim is the farthest forward in terms of legal hearings.
If the Asda employees are successful in their claims, Asda could be looking to pay out £100millions in compensation, as well as back pay and pay rises in the future. Asda are fighting the claim and have appealed multiple technical points. It is therefore likely that it will take years for the claims to resolve, with the Supreme Court and (subject to its future powers) potentially even the European Court of Justice, being asked to rule along the way. Interestingly, Asda's median gender pay gap is 8.9% which is below the national average so whilst there may be a relationship between gender pay gap reporting and equal pay in terms of the issues they deal with, there is no automatic link between the two.
Could this affect your business?
If the Asda employees are successful in their claim, and so far they have won a key legal argument enabling them to compare retail and warehouse workers, then this could have potential implications for other employers particularly those in the retail sector who have a similar arrangement in their own workforces. This is in part because the sector is being targeted by 'no win no fee' lawyers who have spotted an opportunity in the often very segregated gender makeup of the retail sector and also because some of the key issues are already being tested in the Asda litigation which could pave the way for similar claims against other employers who operate in a similar way, namely those who have a large proportion of women in retail stores and a large proportion of men in warehouses or distribution centres who are paid more that the retail staff.
In addition, workers will now also be able to look at their own employer's gender pay gap reports, if they work for an organisation that employs 250 people or more. Whilst these reports do not show what individual people earn, the gender pay gaps for certain roles within an organisation, or the proportion of men and women employed in certain roles they could still suggest pay inequality and will likely require explanation.
All of this means that workers are more likely to be alert to the issue of equal pay and, in light of the supermarket claims, are more likely to be approached by lawyers looking to assist them.
What should employers do?
Employers with highly gender segregated workforces are at increased risk of equal pay claims. If you are in this position then you should assess the risk to your business. Some particular steps to consider are set out below:
If you would like to discuss further any of the issues raised in this article please contact me on +44 (0)1392 685216 or email [email protected].