Commission calls for radical equal pay reform and a new approach to closing the pay gap

16 March 2009

The Commission today called for radical reform of the 1975 Equal Pay Act. Nicola Brewer, the Commission's Chief Executive, said the Act was 'no longer fit for purpose'.

Britain's outdated equal pay laws are almost exclusively reliant on individual women bringing lengthy and costly tribunal cases when they experience discrimination - a system that delivers more conflict than change.

At a time when the tribunal system is straining under a massive almost 500 percent rise in equal pay claims over the last four years, the limits of a so-called 'complaints led' approach - as opposed to one that puts more onus on employers to ensure their pay systems are transparent and fair - are increasingly obvious.

Ahead of the publication of the Government's upcoming Equality Bill, the Commission is calling for:

  • increasing  transparency, by ensuring employees are allowed to discuss their pay by banning ‘gagging’ clauses
  • larger companies to have a much more transparent approach to the pay gap by publishing the number of men and women in each pay band, to help identify segregation in workplaces and underlying reasons for the pay gap
  • representative actions to allow the Commission or Trade Unions to bring claims on behalf of a group of workers, therefore helping to clear the backlog of cases in the tribunal and deliver justice to women faster
  • empowering employment tribunals to make wider recommendations to avoid multiple cases from the same employer and ensure the root cause of the original claim are addressed
  • hypothetical comparisons to be permitted where no suitable comparators are available.

Beyond the Bill, the Commission is calling for a high-level review to explore further options for radical reform, including the possibility of 'transitional arrangements', where employers and workforce representatives committed to change have some protection from litigation while they put their house in order.

Nicola Brewer, Chair of the Equality and Human Rights Commission, said:

'The 1975 Equal Pay Act is no longer fit for purpose. We need to look afresh at what modern equal pay legislation should look like. The approach in the 1975 Equal Pay Act represented the best thinking at the time, and indeed helped close the gap from 29.4 percent  to 17.1 percent. But it's time to shift the focus to preventing problems from arising in the first place, rather than tackling them through the tribunal system after the fact. The upcoming Equality Bill is a significant opportunity to move towards a modern approach.

'Beyond the Bill, the Commission believes more radical reform is needed via a separate review. Moving away from a system that places the burden solely on the 'victim' to seek redress to one where employers take a proactive approach will take time - and there's not yet consensus among employers, unions and legal experts as to what a fully modern approach should look like.

' For example, how can we take a fair and practical approach to transitional arrangements that both remove the roadblocks to change, but safeguard individual women's rights? We need to spend some time doing the hard thinking and bring together various interested parties to make long term and sustainable solutions a reality.'

Among other things, a separate review could explore a practical and fair approach to address the fact that - as the law currently stands - employers are discouraged from complying with the equal pay legislation, because once they have recognised the reality of the gender pay gap in their organisation and committed to eliminating it, they are vulnerable to equal pay claims.

Serious consideration may need to be given to transitional arrangements, whereby employers and workforce representatives who are really committed to implementing equal pay are able to do so without immediately being derailed by litigation.

In the meantime, the Commission will continue to encourage employers to take the kinds of active steps to manage their pay systems the Commission hopes will become increasingly commonplace.

The Commission is today publishing a new guide for employers on high risk pay systems - precisely the types of scenarios that are increasingly winding up in court - and how to avoid them. The Commission is also publishing a diagnostic toolkit for employers who wish to carry out an equal pay audit.

The Commission is also committed to tackling the other 'cultural causes' of the pay gap, such as the unequal impact of caring and occupational segregation as identified in the Women and Work Commission Report, that are not necessarily within the scope of legislation to address.

The Commission will shortly publish the results of the first phase of its Working Better programme of work, which looks at modern ways of working and parental leave models that meet the challenges of the 21st century.

Read our position paper on Equal Pay

See our guidance on high risk pay structures

Explore our online toolkit for employers for equal pay audits

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For media enquiries contact the Equality and Human Rights Commission Media Office on 02031170255, out of hours 07767272818.

Notes to Editors

The most recent figures from the Office of National Statistics indicate that the full-time gender pay gap has increased to 17.1%, up from 17%. Particularly worrying, the part-time pay gap has increased from 35.8% to 36.6%, indicating that the penalty paid by women who work part time to balance work and family life is actually on the increase.

When the Equal Pay Act came into force in 1975, the pay gap was 29.4%.

Based on these figures, the Commission estimates that the average woman who works full time will miss out on £369,000 over the course of her working life. That translates into: 16 house down payments, paying off student debt 18 times over, 31 years of childcare, 22 new cars, 511 holidays, 10,218 nights out -- including dinner and drinks with friends.

The number of equal pay claims lodged at employment tribunal has risen more than 150 percent in the last year, and almost 500 percent over the last four years for which figures are available. (According to latest figures from the Employment Tribunal Service)
2004/2005: 8,229
2005/2006: 17,268
2006/2007: 44,013

Equal pay claims now make up one in three of the claims being filed with the Employment Tribunal.

Read our guidance on high risk pay structures

See our online toolkit for employers for equal pay audits

The Equality and Human Rights Commission is a statutory body established under the Equality Act 2006, which took over the responsibilities of Commission for Racial Equality, Disability Rights Commission and Equal Opportunities Commission.

The Equality and Human Rights Commission is the independent advocate for equality and human rights in Britain. It aims to reduce inequality, eliminate discrimination, strengthen good relations between people, and promote and protect human rights.

The Equality and Human Rights Commission enforces equality legislation on age, disability, gender, race, religion or belief, sexual orientation or transgender status, and encourage compliance with the Human Rights Act. It will also give advice and guidance to businesses, the voluntary and public sectors, and to individuals.