The benefits for rewarding good service are clear; it can boost morale, improve productivity and, ultimately, have a positive impact on a business’ bottom line. But today, in an environment where the spotlight is, rightly, on fairness and equality, it is important for employers to ensure all reward and recognition schemes are non-discriminatory.
The introduction of gender pay gap reporting has highlighted the differences in pay between male and female employees, with many well-known brands hitting the headlines for both the right and wrong reasons. Government figures collected after the gender pay gap reporting deadline on 5 April 2018 reveal that eight out of 10 large businesses pay men more than women and the UK’s average gender pay gap is 18%.
However, when looking more closely at the figures, it is clear that the issue concerns not only the gender of employees, but other employee demographics too.
Several equal pay claims have been brought or threatened against a number of big employers in recent months, including the ‘big four’ supermarkets. Many of these focus on job type, for example, female shop-floor staff comparing their work to that of male employees who work in warehouse and distribution.
The Equality Act 2010 requires men and women to get equal pay for equal work, and this includes being paid the same for doing jobs of equal value.
An employer may be able to rely upon ‘the material factor’ defence to justify paying a man more than a woman, or a woman more than a man, for doing equal work provided the reason for the difference in pay is not discriminatory. Whether the defence is available to the employer depends on the individual circumstances of the case.
Despite the recent publicity, not all claims about differences in pay and benefits are equal pay claims.
While claims relating to rewards such as pension benefits, non-discretionary bonuses, performance-related pay and benefits, sick pay and contractual benefits-in-kind are covered by equal pay legislation, a sex discrimination claim would be the avenue employees could pursue for issues regarding discretionary pay rises and discretionary bonuses, as well as promotions.
In my view, equal pay claims are only going to increase given the publication of gender pay gap information. I would expect to see discrimination claims, specifically sex discrimination, increase alongside this. We may also see the government introduce ethnicity pay gap reporting, which was mentioned in the Conservative Party 2017 manifesto, and claims arising out of that.
Employers must ensure that employees from varying demographics are not rewarded differently because of something linked to a ‘protected characteristic’ under the Equality Act, such as age, race or sexual orientation. Different approaches taken to employees that can be linked to ‘protected characteristics’ can give rise to employee relations issues and claims.
Equal pay audits and job evaluation studies may help an employer to understand whether they have an equal pay issue or gender pay gap, and allow them to address any issues. This, of course, is part of the reason the government has demanded that organisations publish their gender pay gaps this year.
If issues are not addressed, they can cause further problems beyond grievances and legal claims, such as reputational damage, increased legal fees and management time and impact staff engagement.
Nick Campbell is partner and head of employment, Liverpool, at law firm Brabners