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Avoiding and defending sex discrimination and equal pay claims

 

In the light of latest figures on sex discrimination and equal pay claims brought by employees, HR departments must be aware of how to avoid sex discrimination and equal pay claims and, if claims are brought, how to defend them. Equal pay claims can be extremely costly, particularly from high earning executives, and back pay can be claimed for up to six years. Likewise, compensation damages for sex discrimination are uncapped. Not to mention unwanted publicity and loss of staff morale.

Overview

Background

Latest figures from the Employment Tribunal show that between 1 April 2007 and 31 March 2008, equal pay disputes came top of the list, with 62,706 claims and sex discrimination claims came in at 26,907. The gender pay gap is particularly high at 44% in the financial services industry.

The vast majority of sex discrimination and equal pay claims are settled before reaching the Employment Tribunal although not usually before various stages of litigation have been completed.   Many cases end with a compromise agreement under which an agreed level of compensation is paid to the employee. 

 

Example of typical sex discrimination and equal pay case

A high-earning executive has been employed in different countries under different contracts. She is claiming equal pay and sex discrimination dating back many years. She claims she has been denied promotions and training opportunities that were given to her male colleagues and that she was essentially frozen out of the organisation. She took a period of maternity leave and on her return to work was selected for redundancy.

What can you do - advice for employers

There are a number of steps HR departments can take to avoid claims for sex discrimination and equal pay in the first place:

Ensure you have an equal opportunities policy and an anti-harassment and bullying policy, which are reviewed regularly and adhered to.

  • Provide training on these policies
  • Provide access to training courses and opportunities for promotion to women
  • Undertake a job-evaluation study, which can help prevent future claims
  • Pay women pay rises and pro-rata bonuses whilst on maternity leave
  • Ensure that redundancy procedures and selection criteria are not indirectly discriminatory to women, e.g. by including length of service as a criterion, as women are more likely to have taken career breaks
  • Provide women returning to work with a first right of refusal to suitable alternative employment.

However, if you are faced with a sex discrimination or equal pay claim, you will need specialist advice.  Sex discrimination and equal pay claims can be complex and time-consuming to defend.

Possible defences to sex discrimination and equal pay claims

Equal pay claim defences include:

  • Claiming a genuine material factor (GMF) defence in an equal pay claim, which can establish that the difference in pay is due to a material factor, that was significant and was in no way related to sex, such as past performance, levels of seniority and different grades or points on a pay scale.
  • Genuine material factor defences in equal pay cases must not be "tainted by sex" and if they are, they must be objectively justified. There is some uncertainty as to whether they must be objectively justified in any event.
  • In order to be objectively justified, a difference in pay must correspond to a real business need on the part of the employer, must be an appropriate means of achieving the objective pursued and must be necessary to that end.

Sex discrimination defences include:

  • Defences to claims of sex discrimination may be genuine occupational qualifications (GOQ) in the arrangements for recruitment and access to training, transfer or promotion in employment to that role.
  • A genuine occupational qualification  cannot be used to justify a dismissal or other detriment. However a GOQ may be used to justify selection for redundancy where it relates to an alternative job which the employer is considering offering redundant employees.

Categories

The eight genuine occupational qualification categories are summarised as:

  • where the job calls for a man for reasons of physiology (excluding physical strength or stamina) or, in dramatic performances or other entertainment, for reasons of authenticity
  • for reasons of decency or privacy
  • where a job is in a private home for example in relation to a personal carer
  • where the accommodation is single sex
  • in hospital, prison or other establishment for men
  • welfare services which can most effectively be provided by a man
  • in countries outside the United Kingdom whose laws or customs are such that the duties could not, or could not effectively, be performed by a woman (a tribunal will look carefully at the evidence to support any assertion of a GOQ on this basis) and
  • discrimination where the job is one of two to be held by a married couple or a couple in a civil partnership.

An employer is not permitted to rely on the genuine occupational qualification defences to a sex discrimination claim (except the GOQ in relation to married couples or couples in civil partnerships) if it has a number of employees of mixed sexes and it would be possible for the employees of the appropriate sex to undertake the "objectionable" elements of the job.

HR departments should also be ready to respond to equal pay and sex discrimination questionnaires, which may be served by the claimant and should be responded to within 8 weeks of receipt.

Recent case on equal pay

In the case of Joyce Slack & Ors v Cumbria County Council and Equality and Human Rights Commission 2009, the issue of stable employment was explored, allowing two of the claimants the right to bring a claim for equal pay for a period of employment covered by two employment contracts, without breaks between the contracts. This case may help open the door for claimants to bring claims for longer periods of employment, although an assessment of stable employment will always hinge on the facts.

Ultimately the decision in practice means that more cases will be successful which in turn means the levels of compensation paid out on equal pay claims which often include sex discrimination claims will increase.  This is likely to give rise to more agreed compensation arrangements entered into under compromise agreements.

Conclusion

Employers and their HR departments need to be aware of the costs and all the issues surrounding equal pay and sex discrimination claims and be ready to defend such claims when they arise. 

 

Fees

Gannons work on a fixed fee or capped fee basis.  This provides our clients with clear perimeters in which to budget. 

This paper is designed to provide a summary of the issues addressed. Therefore, it is not intended as a detailed commentary on the relevant law and any comments made should not be acted upon without first taking specific legal advice.

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