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Is your business on board with equal pay rights?

The importance of transparency and fair processes when it comes to equal pay rights has come under the microscope in recent times, especially in light of the recent case involving Next.

The retail giant lost a six-year legal battle to more than 3,500 of its current and former employees over equal pay and serves as a cautionary tale for other businesses to ensure that their pay practices are up to standard.

Understanding equal pay rights

Equal pay rights stem from the principle that men and women should receive equal pay for equal work.

This includes not only the basic pay but also other benefits such as bonuses, holiday pay, and pensions.

The Equality Act 2010 protects this principle in law, requiring that employers provide equal pay for work of equal value, regardless of gender.

The Next case

The recent ruling against Next has implications for employers across all sectors.

The tribunal found that Next’s store staff, predominantly women, were paid less than their counterparts in warehouses, where a higher proportion of employees were male.

Despite Next’s argument that higher pay for warehouse workers was justified by market rates, the tribunal ruled that the business’s need to reduce costs did not override the discriminatory effect of lower pay for female retail staff.

This case, which could result in more than £30 million in back pay, has highlighted the risks employers face if they fail to address pay disparities.

It also demonstrates that even without direct discrimination, businesses can still be held liable if their pay structures disadvantage one gender over another.

Steps employers must take to ensure equal pay

To avoid the legal and financial repercussions of unequal pay claims, employers should take steps to ensure their pay practices are fair and compliant with the law.

Conduct regular pay audits

Review and compare the pay of employees performing similar roles across your organisation.

This should include basic pay and other forms of compensation, such as bonuses and benefits.

Identifying and addressing disparities early can prevent potential claims.

Ensure job evaluations are consistent

Assess roles based on their demands, responsibilities, and skills required, including factors such as decision-making authority, level of expertise, working conditions, and the impact of the role on the organisation’s objectives.

This evaluation helps to ensure that employees performing work of equal value are compensated equally, considering all relevant aspects of their roles to avoid any unintended biases or disparities.

Regularly updating these assessments will help with maintaining fairness as roles and business needs evolve.

Review market rate justifications

While market rates can influence pay, relying solely on these as a justification for pay differences is risky.

As seen in the Next case, tribunals may reject such arguments if they result in gender-based pay disparities.

Ensure that market rate justifications are well-documented and applied consistently across all roles.

Provide training for management

Managers responsible for setting pay should receive regular training on equal pay laws and non-discriminatory pay practices.

This helps to ensure that pay decisions are made fairly and consistently.

The consequences of non-compliance

Failing to address pay disparities can lead to significant legal and financial consequences.

As the Next case demonstrates, employers may face costly tribunal cases, substantial back pay awards, and damage to their reputation.

Equal pay claims can also have a ripple effect, encouraging employees in other sectors to pursue similar cases, potentially leading to industry-wide changes.

If you’d like assistance with your pay practices, our team of employment law solicitors are here to guide you. Contact us today.

Amanda Hyam

Head of Dispute Resolution and Employment

I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.