Disparity between genders in the workplace has not been such a hotly discussed topic since the 1970’s, when discrimination legislation came into force. This year has seen new legislation come into operation that compels companies with over 250 employees to publish their rates of pay rates and seniority of male and female employees. For some companies, shareholders and female staff the gender pay gap has been an explosive eye opener.
Highly paid corporate roles
Transparency has led to unease across all industries and all roles. At one end, female employees at Barclays investment bank in London discovered that women’s median hourly rate is 43.5% lower than male colleagues and that women’s bonuses are 73.3% lower. Another employer with one of the biggest gender gaps in terms of disparity is Goldman Sachs which has just reported a mean gender pay gap of 55.5%. Some difficult conversations and justifications will be happening in many companies as a result of this spotlight and it remains to be seen what changes happen as a result.
In the retail sector there is much interest in the outcome of Tesco and Morrison’s equal pay claim between shop floor workers and distribution centre workers, who it being argued have a similar role. Competitors such as Asda and Sainsburys are watching with interest because the financial implications are huge. It is estimated that 200,000 staff could be affected which means Tesco could have an eye watering liability of over £4 billion to correct and compensate female in-store staff on £8 per hour compared to male staff in its distribution centres who earn up to £11 per hour. Unfortunately, Tesco’s fleet of corporate jets have already been sold off so no slush fund there.
A few years ago, local councils settled claims of dinner ladies and cleaners who successfully argued that their pay was comparable with similar roles of bin men. The jobs involved different day-to-day duties but in it was successfully argued that both were unskilled jobs involving physical labour. The ruling was that both roles were of equal value to a council, they provided public services and therefore, should be paid the same. Many individuals who had long service received substantial sums of backdated pay-outs, including compensation for lost pension and overtime.
While it corrected the disparity and made a significant difference to a group of ladies’ lives, there were repercussions. Many local authorities cut dinner lady roles (some councils cut up to 5000 roles). Terms and conditions changed with many dinner ladies brought in for limited number of hours per day to heat and serve rather than actually cook. Commonly food is now bought from an external supplier and dinner lady roles have been combined in some places with playground supervision on lower paid less hours.
What are the implications for organisations?
Law firms operating on a no-win no-fee basis are accessible and persistent and can organise groups of workers through grassroot platforms like Facebook. This bypasses traditional routes via unions or tribunals and it is a significant change that employers need to be alert to. There are some factors employers and HR managers need to be clear on.
- claims can be brought on the basis that completely different jobs are of equal value to an organisation (unless there is a ‘material factor’ which explains the difference – such as seniority, geographical reasons, skills shortages and so on).
- Jobs do not have to be the same or even in the same department in order for an equal pay claim to arise. An employee has to compare their pay with a comparator.
- It is not always the case that only employees comparing themselves with a fellow employee at the same workplace can claim. It is perfectly possible for someone to compare themselves with an employee at a different workplace or location, ‘common terms’ would have to apply at both locations. There may be no equal pay issue at one location, but this does not automatically avoid the risk of an equal pay claim.
So, what can employers do? Well avoid being surprised – conduct regular job evaluation and pay grading reviews. Your HR resource is expensive but your first line of defence so make sure time is allocated to protecting you, ensure that job monitoring happens regularly and thoroughly. The rise in popularity of the HRM function was in part to improve employee relations and the welfare of employees at the same time as a general decline in trade union activity. It could be argued that an expensive HRM function has not served the rights of dinner ladies, shop floor workers, executive financial staff or employer organisations in the examples above. Especially when compared to the rise in (predominantly male) CEO and executive pay and bonus levels over the last 15/20 years. It has taken UK legislation to come in to address the disparity rather than an organic rise within organisations to compete and attract the best women in the UK.
Companies need to be more responsive in protecting themselves from business catastrophic claims. They need to diligently unearth pay disparity, make pay scales transparent and underpin with a sound job evaluation process to be able to defend themselves from a gender/equal value claim. This can often be more robust if carried out by an independent expert. If you want advice from an expert contact us.
Author: Love Your Employees