The principle that men and women should receive equal pay for equal work is codified in the Equality Act 2017 (“EqA 2017”)[1]. In fact, the EqA 2017 equal pay provisions apply to all contractual terms not just basic pay or pay rates so as to include, for example, holiday entitlement, pension, sick pay, redundancy pay and performance-related pay (i.e. non-discretionary bonuses). Although the law on equal pay may seem complicated, its purpose is simple: to ensure that where women and men are doing equal work, they receive the same reward for it.
(NB For the purposes of this note, we have described situations in terms of a woman comparing her work to that of a man in the context of an equal pay claim. However, it could be the other way around – i.e. a man can also bring an equal pay claim based on the difference of sex where his comparator is a woman doing equal work.)
Who can bring a claim?
To bring an equal pay claim, a woman or a man must be – or have been – “employed” under a contract. This means that full-time and part-time workers as well as those employed under a casual or temporary contract can bring an equal pay claim. The EqA 2017 provisions also confer rights on other categories of individual who perform work personally (including those who are self-employed), however this article focuses primarily on the rights of employees engaged under a contract of employment.
Comparators
In order to establish pay disparity and enforce rights to equal pay, an employee needs to be able to identify a comparator of the opposite sex doing the same or a comparable job (i.e. “equal work”). The comparator needs to be a current or previous employee working at the same establishment, a different establishment but with common terms, or be employed by an associated employer as defined in the legislation.
What is “equal work”?
There are three situations where employees could be performing equal work, these are:
- where a man and woman are doing “like work” – work that is the same or broadly similar, provided that where there are any differences in the work these are not of practical importance;
- where a man and a woman are doing “work rated as equivalent” – work will be rated as equivalent if the employer has carried out a job evaluation study which places the jobs of the man and the woman at the same grade/rating in terms of the demands made on the employee; or
- where a man and a woman are doing “work of equal value” – work that isn’t “like work” or “work rated as equivalent” but which is nevertheless equal in terms of the demands made on the employees by reference to factors such as effort, skill and decision-making.
Some jobs can be classed as equal work, even if the roles seem different. For example, a clerical job and a warehouse job might be classed as equal work.
Sex equality clause
Where it is established that a man and a woman are doing “equal work”, the EqA 2017 automatically implies a sex equality clause into the woman’s contract of employment, modifying it where necessary to ensure her pay and all her other contractual terms are no less favourable than the man’s. If a woman can show that her pay is lower, another term of her contract is less favourable or she identifies a contract term from which her male colleague benefits and she does not (ie he is entitled to a company car and she is not), the employer will have to show why this is the case. If the employer is unable to show that the difference is due to a material factor which has nothing to do with her sex, then the equality clause takes effect. Note that each term is taken on its own; the employer cannot argue that, overall, the total effect of the terms and conditions is no less favourable, for example.
Defences to an equal claim pay
The possible defences an employer may raise in response to an equal pay claim are:
- the claimant and the comparator are not doing “equal work”;
- the person whom the claimant has chosen as their comparator does not meet the test under the EqA 2017 (i.e. is not a valid comparator); or
- the difference in pay (or relevant contract term) is genuinely due to a “material factor” which is not related to sex.
Burden of proof
The burden of proof is initially with the claimant in an equal pay case to present facts from which the employment tribunal court could decide there has been a contravention of the EqA 2017 in the absence of an acceptable explanation by the employer. If the claimant can show a “difference” between their terms and those of the comparator, the burden shifts to the employer to prove that the difference in pay and/or other term(s) is for a material reason other than sex.
If the claimant’s case is that the material reason amounts to indirect sex discrimination (i.e. reflects a policy or practice applied to all but which affects employees of one sex disproportionately), the employer will need to provide “objectively justification” for the difference (essentially, they will have to show that the difference is a proportionate means of achieving a legitimate aim).
Time limits
An equal pay claim can be brought in the employment tribunal at any time during the employment to which it relates or, if the employment has ended, within six months of such termination. In the latter case, the time limit will typically start to run from when the employee leaves employment, but it can also begin from the date of a fundamental change in their employment under a new contract.
Where the fact of the pay inequality was deliberately concealed and the claimant could not reasonably have been expected to discover it, the time starts to run from the date when they actually discovered or could reasonably have discovered the inequality.
Employees and workers may alternatively bring a claim for equal pay in the Isle of Man High Court where the time limit for presenting a claim is six years.
Evidence
Before issuing a formal complaint, an employee may wish to submit questions to his/her employer in order to help decide whether he/she might have an equal pay claim. There is no formal statutory process, however Manx Industrial Relations has produced guidance for employees asking, and employers answering, questions on this topic. If the employer fails to respond or gives evasive replies, adverse inferences can be drawn by the employment tribunal.
It is therefore recommended that employers document the reasons behind pay decisions for evidential purposes in case the employer has to defend an equal pay claim, showing how they came to the decision regarding the difference in pay.
Remedies
In a successful case, the employment tribunal can (amongst other things):
- make a declaration as to the employee’s rights under the equality clause; and
- require payment of any arrears (in the case of pay) or damages (in the case of a non-pay contractual term).
Compensation for non-economic loss, such as injury to feelings, is not available in equal pay cases.
Are “pay secrecy” clauses enforceable?
There is nothing in principle to prevent an employer from including in the contract of employment (or worker’s written terms and conditions) a “pay secrecy clause” that seeks to restrict disclosure by an employee of their pay to someone else and/or prevent the employee from seeking information from a colleague about their pay. However, an employer cannot enforce a pay secrecy clause if the employee was discussing their pay (or asking a colleague about pay) for the purpose of finding out whether they were being paid differently to a colleague on the grounds of discrimination.
Equal pay audits
It is envisaged that the employment tribunal may in due course have powers to order an employer to carry out an equal pay audit where they have lost a claim relating to equal pay. However, no implementing regulations as would require to be made by the Department for Enterprise under section 134 of the EqA 2017 have yet been introduced.
In any event (i.e. whether mandatory or not), an equal pay audit can be helpful in evidencing that an organisation’s pay system is transparent and based on objective criteria. (Transparent pay systems are, for obvious reasons, less likely to give rise to equal pay claims.) An equal pay audit involves comparing the work, pay and benefits of men and women in the workplace, identifying any pay gaps and investigating the cause(s) for them, plus eliminating instances of unequal pay that cannot be justified.
In contrast to the UK, the Isle of Man does not currently require compulsory reporting of gender pay gap information.
Pregnancy and maternity – the “exception to the rule”
Pregnancy and maternity provisions under the EqA 2017 do not apply to contractual terms relating to pay and therefore an employee who is pregnant or on maternity leave would not be able to claim that their salary should be equal to that of their maternity cover, even where the maternity cover is a man. However, once the employee returns from maternity leave, the protected period relating to pregnancy and maternity provisions come to an end and the normal rules relating to equal pay and sex discrimination apply. An employer will only be able to defend paying a man more than a woman for doing equal work if the employer can show that the difference in pay is due to a material factor which is not directly or indirectly discriminatory, for example the man is more qualified, their skills are crucial to the job, or it is hard to recruit so the package needs to be attractive.
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Reference:-
[1] Part 5, Division 3
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Useful resources:-
https://www.gov.im/media/1370831/final_gd2020_0045_equal_pay_code.pdf
https://www.mirs.org.im/media/1168/equal-pay.pdf