Justifying pay differences
If opposite sex workers received different pay, you used to be able to justify the differences. However, a new case has changed this. What’s to know?
Pay divide.According to the Equal Opportunities Commission, women in full-time work still earn 17% less per hour than men. Therefore, it’s not surprising that equal pay claims have been on the increase. However, you could defend one by arguing that the reason for the pay differential is historical and nothing to do with gender.
Work of equivalent value. This issue was recently considered in Sharp v Caledonia Group Services Ltd 2005. Sharp (S) had been employed by Caledonia (C) as an accountant since March 1996. In March 2002, she made an equal pay claim based on the fact that she was doing work of equal value to a male office manager - she was paid a salary of £35,250, whilst he received £40,000. An independent assessor compared the two posts and found that the pay differential existed for purely historical reasons. This was because the male comparator had previously acted as a private secretary to the company chairman until his death and his salary had reflected the personal nature of this relationship.
Claim. S brought a tribunal claim for equal pay. In its defence, C argued that it was protected under s.1 (3) of the Equal Pay Act 1970. This states that if the variation in pay is due to a “material factor” that is unrelated to sex and it’s a genuine reason, the difference is justified. The tribunal agreed and dismissed S’s claim. On appeal, S relied on a European Court of Justice (ECJ) finding which held that any case relying on the material factor defence must be objectively justified; historical reasons aren’t enough. C argued that the EAT should follow the reasoning used by domestic courts, e.g. that S had to show indirect discrimination before C had to prove that it was objectively justified. The EAT disagreed and followed the ECJ approach.
Tip. Carry out a review to see if you have any historical pay differences where male and female employees carry out work of equal value. If you find real differences between posts, e.g. one requires more technical skills or working shifts, record the reasons why - just in case.
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