The latest decision in relation to equal pay has got many people talking. If you have caught the headlines in recent weeks, you may have heard that the high street retailer, Next, has lost a significant equal pay case. Claims were brought against the company by female retail sales staff who argued that under the equal pay law, a number of their pay-related contractual terms should be equal to the more favourable ones of the warehouse operatives, including their basic pay. The case involved over 3,500 employees and it is estimated that it could cost the Company over £30 million.
What you need to know:
- Equal pay fast facts
- What happened in the Next case
- What to do if your employee raises a complaint
Equal Pay – Fast Facts
In a nutshell, the law requires men and women to be given equal pay and contractual terms for equal work (that is ‘like work’, work rated as ‘equivalent’ or work of equal value), unless the employer can show that there is a material reason for the difference which does not discriminate on the basis of sex.
- Equal pay covers things such as basic pay, overtime rates and allowances. Employees can compare such terms in the contract of employment with the equivalent terms in a comparator’s contract. A comparator is an employee of the opposite sex working for the same employer.
- Where an employee succeeds in an equal pay claim, a sex equality clause will be implied into the employee’s contract of employment. The effect of this is that the less favourable term(s) of their contract are replaced by the equivalent more favourable term(s) of the comparator. The tribunal or court can also order the employer to pay arrears of pay for up to six years, or damages in the case of a non-pay contractual term.
- Whilst a lot of equal pay cases have concerned claims made by women, the law provides the same protection to men.
What happened in the Next case
As mentioned earlier, claims were brought against Next by female retail sales staff who argued that under the equal pay law, a number of their pay-related contractual terms should be equal to the more favourable ones of the mainly male warehouse operatives, including their basic pay. The work done by retail sales staff in the Next stores was previously ruled to be equal to the warehouse operative work in terms of the demands involved.
Next argued that amongst other things, the difference in pay for the two roles was based on the “market rate” for each role – the market rate for a warehouse operative is more than for a retail salesperson – this approach had been used by Next for ‘successful business performance’. Whilst the employment tribunal accepted that this did not involve direct sex discrimination, it found that the market forces approach had put the female retail workers at a particular disadvantage when compared with men doing equal work. This required Next to show that they had acted proportionality to achieve a legitimate aim, which the judge ruled on the facts of the case in relation to some contractual pay terms such as basic pay, they were unable to do. The judge held that when there are two labour markets doing equal work, but the mainly male market (warehousing) is paid more than the mainly female market (the retail stores) because these are the market rates, that reason alone is not a lawful defence to an equal pay claim. The judge said “…For market forces to be a trump card in this way would defeat the objective of the legislation; lower pay in particular sectors due to indirectly discriminatory practices could then be lawfully sustained in perpetuity. There must usually be a more compelling business reason for such arrangements to be justifiable.”
Next has indicated that it will appeal the tribunal’s decision.
What to do if your employee raises a complaint
It is important for businesses to be alert to complaints raised by employees, including those relating to equal pay. If an employee in your organisation raises a complaint, you should contact Kingfisher Professional Services Ltd for specific advice on the facts of your case.
If you have an employment law matter you would like assistance with, please do not hesitate to contact us as we are happy to help.