Equal pay claims in education

The principle of equal pay legislation has been around for over 40 years; it is a central tent of UK and EU law. The general principle is that employers must pay and treat men and women (who perform substantially the same jobs) equally.

Pay refers to any contractual entitlement such as bonus, holiday and pension and not just basic salary. A recent case in the Education sector has served to highlight the fact that equal pay claims, if successful, can be costly. The Education sector is far from immune to these types of claims and the case only demonstrates that Colleges should be alive to the issue as a whole.

The effects of equal pay legislation were brought to light last week in the Education sector, with 23 male workers (caretakers, tradesmen) at the University of Wales, Trinity St. David (Swansea) suing for sex discrimination, claiming they were paid less than women on the same pay grade (secretaries, office workers). The case was listed for 22 April 2014 in the Swansea Employment Tribunal although the University has now conceded the claims, with the projected settlement amount to total more than £500,000. The amount of damages serves to highlight the potential financial liability faced by employers who fail to level their employees’ contractual benefits.

The law operates by implying a ‘sex equality clause’ into a contract, so that less favourable terms are replaced by those more favourable terms existent in an equivalent colleague’s contract of the opposite sex. Claimants who feel discriminated against on equal pay grounds are entitled to pursue a claim for arrears of pay (going back 6 years) and damages for breach of a non-pay term. Declarations can also be ordered to equalise pay in the relevant organisation going forward. The financial cost of equal pay claims can therefore be huge and unlimited, a far cry from the traditional cap on an unfair dismissal claim in the Tribunal.

This case was unusual for two reasons. First, it was men rather than women pursuing the claim. Whilst the vast majority of equal pay claims are brought by women, the legislation is drafted so that men can equally bring these types of claims. Secondly, the case focused on equal treatment under jobs rated as equivalent under a job evaluation scheme. Most equal pay claims are brought by claimants using the other two heads of claim, that is, that they are engaged in like work or work of equal value to their comparators.

Since 2005, over 200,000 equal pay claims have reached tribunal stage; the vast majority being in the public sector and principally involving councils. South Lanarkshire Council recently lost a lengthy legal battle against a class action brought by nearly 3,000 of its staff (mainly cooks, cleaners, dinner ladies), some of whom were getting paid just 50% when compared with male counterparts. This, Scotland’s biggest ever equal pay settlement, cost the Council £75m. Birmingham City Council workers agreed settlements totalling in excess of £1bn earlier this year. The City Council is now finding ways to meet this liability, prompting it to consider selling ”crown jewel assets” such as the NEC, the ICC and its shares in Birmingham Airport.

The Education sector has to date not faced many of these expensive claims. To protect their position, however, Colleges should seek to establish whether there are significant pay gaps by undertaking equal pay reviews. This would highlight whether any exist, and the potential liability, and may allow time for consideration as to the extent to which these can be objectively justified on factors other than sex.

The recent case in Wales serves to highlight the risk of equal pay claims generally and serves as a timely reminder that there should be no complacency on the gravity of the cost of equal pay claims.

Matt Kelly is a partner at Thomas Eggar, the law firm