Equal value = equal pay

An employee is entitled to contractual terms as favourable as those of someone of the opposite sex carrying out equal work for the same employer.

As an employer, you can defend an equal pay claim by showing that the difference in terms is due to a ‘material factor’ other than gender.

The Employment Tribunal recently examined the practise of paying warehouse staff at a higher rate than their shop floor sales colleagues. 

Background

Over 3,500 shop-floor sales workers brought claims for equal pay against Next.

The predominantly female claimants contended that paying them less than their predominantly male warehouse colleagues was a breach of equal pay law.

In an earlier hearing, the Employment Tribunal found that the claimants carried out work of equal value to the warehouse staff.

Employment Tribunal

Next advanced “material factors” in defence of the claims including: market forces and market price, difficulty in recruiting and sustaining sufficient warehouse staff, incentivising work in the warehouse, and the viability, resilience, and performance of the Next group.  

Although this argument was successful on ten of the claimants’ contractual terms, Next failed to establish the defence on seven terms in their contracts of employment, including that of basic pay, paid rest breaks, and long-service awards.

The Employment Tribunal considered whether the material factors advanced were indirectly discriminatory.

There was a disproportionate adverse impact on women. Were the factors advanced justified as a “proportionate means of achieving a legitimate aim”?

The Employment Tribunal thought not.  They were purely about cost-saving. This was not permitted. Had the aims been legitimate, paying different sums of basic pay to warehouse and retail staff was not a proportionate means of achieving those aims. The business need was insufficient to overcome the discriminatory effect of the lower basic pay.

Comment

Equal pay claims are challenging to defend and can be costly, including your time, legal costs,  and compensation.  It is, therefore, not surprising that Next has confirmed that it will appeal this decision.

Although not binding on future tribunals, the decision in this case could impact other employers unless overturned.

As an employer, you should conduct an equal pay audit, including looking across different job roles and considering whether any job roles are of equal value to others.

Employment tribunals will carefully examine your reasoning for differentials in pay.  Take care to document your reasons, ensuring they are not just about saving you money!

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