📣EQUAL PAY ESSENTIALS | JUST WHAT THE TRIBUNAL ORDERED📣

If an employee has brought an equal pay claim and has been successful in the Tribunal, what comes next? 🤔

Well, if the employee is successful, that means it's time for the Tribunal to decide on the appropriate remedy! 👩⚖️💷📃

Remedies can be financial (and up to £1.1 billion in compensation in the case of Birmingham City Council…) or a declaration can be made as to the rights of the claimant and/or their employer in relation to the claim that has been brought. Critically, declarations can also have financial implications for employers, even if the Employment Tribunal decides not to award compensation for a successful equal pay claim. 😬

Finally, the Tribunal is also obliged, where a finding of unequal pay for equal work has been reached to order the employer to conduct an equal pay audit (as the Tribunal did historically for the first time in the Stacey Macken case against BNP Paribas). 💻

So, what are the financial consequences?

1) Entitlement to Arrears - this remedy is often the one most dreaded by employers, as it can impose such a hefty financial penalty.🤑 In standard equal pay claims, arrears can go back up to six years before the date the claim was brought (in England and Wales). However, the arrears date can be extended, by discretion of the judge, to the day on which the breach first occurred, in cases where the employee has an incapacity or if there has been a concealment or fraud committed by the employer.

In claims that relate to a denial of equal access to pension schemes, the House of Lords ruled (back in 2001) that pension benefits may be awarded back to 8 April 1976 – which means a failure to ensure that all employees have the same access to pension schemes could be incredibly costly! Employers should also take note that the employer must provide the resources to a pension scheme as are necessary to secure that employee’s rights without requiring any additional contributions to be made by the employee or any other members of the scheme.

If the claim is brought under a ‘rated as equivalent’ header, based on a job evaluation scheme, the arrears awarded cannot cover the period before the evaluation scheme was implemented. This is because the jobs were not rated as equivalent before the evaluation scheme was carried out. If an employee was seeking to be awarded arrears before the date of the evaluation scheme, it would have to be based on equal value.

If a claimant amends their claim to refer to different comparators, they will not be deemed to have brought new causes of action. Therefore, they can seek pay arrears for the six-year period up to the date on which their original claims were brought – it will not be changed to the date they amended their claim. ⛔

2) Damages - if the equal pay issue in question is that of a contractual term that does not relate to pay, a Tribunal can award damages if they find that such a breach has taken place. The award of damages is subject to the same time limit of arrears – being up to six years before the date the claim was brought. 💸

 3) Interest - as in other discrimination cases, equal pay awards can be made subject to interest. Interest runs from the mid-point between the start of the contravention of the equality clause and the judgment date. Interest will be calculated as simple interest, accruing day to day. Any claims brought after 28 July 2013 can have an applicable rate of interest of 8% added. 📈

What's a declaration all about?

All employment contracts contain an implied sex equality clause, which applies where an individual is employed on equal work to that of an employee, in the same employment, but of the opposite sex. Should the Tribunal choose to make a declaration, it is a declaration made of the claimant’s rights under this equality clause and effectively serves as a legal acknowledgment that pay discrimination has taken place. 👩🏼⚖️

Such a declaration will normally be that the employee in question is entitled to receive the same pay and contractual benefits as their comparator in the future, ensuring that employers pay the employee correctly going forwards. Any resultant increase in pay or inclusion of a beneficial term into their contract, since it involves a change to contractual terms, will be permanent and unaffected if the comparator subsequently leaves the business.

Why is everyone worried about Equal Pay Audits?   

Another remedy that can be instituted by the Tribunal is that of an equal pay audit. The Equality Act 2010 (Equal Pay Audits) Regulations 2014 requires Tribunals, in certain circumstances, to order employers who have been found in breach of equal pay legislation to carry out equal pay audits. 📊

Such an audit involves the employer in question publishing the relevant gender pay information for their business. Such an audit must:

👩🏼👨🏼Identify any differences in pay between men and women and the reasons for those differences;

🔍Include the reasons for any potential equal pay breach identified by the audit; and

📋Set out the employer’s plan to avoid breaches occurring or continuing.

If an employer fails to carry out an audit when they have been required to do so, may be liable to pay a fine of up to £5,000. This remedy has rarely been implemented, with the case of BNP Paribas in 2021 understood to be one of the first cases in which such an audit has been ordered. It imposes a huge administrative burden on the employer and all the associated costs of running an audit!

What can’t be awarded?

 As a reminder, claimants cannot recover compensation for ‘injury to feelings’ in equal pay cases. This would only be available if they were claiming sex discrimination based claims.

Further, while tribunals in discrimination cases have the power to make recommendations for actions the employer should take, this is not available to tribunals ruling on equal pay claims, aside from ordering an equal pay audit. 🙅🏼♀️

As the explanation of the various remedies above show, an equal pay claim can be seriously costly for employers! The remedies utilised are designed to address past injustices, compensate for the financial harm and prevent future pay discrimination according to sex.

For claimants, understanding the remedies available when bringing an equal pay claim is crucial for understanding what they wish to achieve from the claim.

For employers, awareness of the potential outcomes that they might face if they are found to not be paying employees equally when they should be, underscores the importance of implementing and maintaining fair and equitable pay practices. ♀️⚖️♂️