A summary of the key principles for employers and employees
What is Equal Pay?
Equal pay is the principle that men and women should receive equal pay for equal work. The Equality Act 2010 gives the right to equal pay between women and men for equal work. It doesn’t just cover basic pay, but also includes:
- Automatic pay progression
- Paid holiday entitlement
- Sick pay
- Hours of work
- Performance-related pay and benefits, overtime rates and allowances
- Non-discretionary bonuses
- Contractual benefits in kind such as company cars
- Pension benefits and access to pension schemes
Pay secrecy and confidentiality
There is no implied obligation to keep pay confidential. Even if there is a pay secrecy clause in the contract, the provisions in the Equality Act take precedence.
It is unlawful for an employer to have a “pay secrecy clause” in a contract which prevents an employee from disclosing their pay to other colleagues or to trade union representatives where they are trying to identify unlawful pay discrimination. It is also unlawful to victimise an employee if they do make such a pay disclosure.
Employers may be concerned about disclosing salary details in case it breaches the Data Protection Act or GDPR. Information about pay that identifies an individual, such as where they are the named comparator in an equal pay claim, is personal data and so GDPR principles will apply.
Can dismissals for disclosure of pay amount to unfair dismissal?
Separately from equal pay legislation, dismissal of an employee for disclosing or discussing a colleague’s salary may be unfair.
In the 2019 case of Jagex Ltd v Mr John McCambridge, an employee with six years’ service was dismissed for discussing a colleague’s salary with other employees. The employee succeeded in his claims for wrongful and unfair dismissal and when upholding his claims, the Tribunal noted that there is no implied contractual term that salary is confidential.
Claims for equal pay
In order to bring a claim for equal pay, it is necessary to identify a comparator, ie somebody who is receiving higher pay or better terms and conditions than you. The comparator:
- Must be of the opposite gender to you
- Can be a current or previous employee, including a predecessor in the job
- Must be (or have been) working "in the same employment". This can be at the same establishment or at different establishments where "common terms" of employment apply
- Must be actual, not hypothetical
Often a claim for equal pay goes hand in hand with sex discrimination. Matters covered by sex discrimination include:
- The terms of a job offer
- Discretionary pay rises
- Discretionary bonuses
Compensation for successful claims
In a successful equal pay case, the tribunal (or court) can make a declaration that there has been a breach of the legislation and require payment of arrears of pay going back up to six years (five years in Scotland).
In a successful unfair dismissal claim, the tribunal can award a basic award and a compensatory award of up to 52 weeks’ pay or £86,444, whichever is the lower.
There is no upper limit for compensation in sex discrimination cases.