Equal Pay: Coming to a Workplace Near You
Andrew Knight, Shepherd and Wedderburn
As Wendy alluded to there, I feel a bit of a fraud as a white male, white heterosexual male in my late 30s, coming and talking about equal pay since statistically, I’m one of the beneficiaries of inequality. So I thought I’d start with a bit of a personal story.
My partner and I met when we were both trainee lawyers at my previous firm. We both trained together and subsequently secured permanent positions, my partner in the corporate finance team and me in the employment team.
Two years into our roles came to salary review time. At this point, we were living together in a flat, a young couple. So inevitably, we opened our pay review letters together. And when we did, we discovered that I had been paid 500 pounds more a year than she had.
And whilst that might seem like a really small and insignificant sum of money, the impact on her was really quite substantial. She felt that she wasn’t valued. She felt that her future at the firm wasn’t as bright as mine. And ultimately, it made her question whether this is what she wanted to do with her life.
Ask her today, and she’ll say it’s the best thing that ever happened to her because she quit the law, became an artist, and she’s doing brilliantly.
The approach that firm took was really siloed. Each team got a budget, and they distributed the money how they wanted to. There was no deliberate decision to pay her less because she was a woman, but the impact was nonetheless substantial.
The moral of that story is if you do these things badly, you end up losing good people. But there’s an even bigger threat lurking in the shadows, and that comes in the form of equal pay claims.
Historically, these types of claims were reserved almost exclusively for the public sector where payouts have been substantial. So we’ve seen Glasgow City Council footing 770 million pounds in settlement of equal pay claims, having to sell Kelvingrove Museum and Galleries to fund that.
But more recently, we’ve seen these claims creep into the private sector, too. So you may have read about Next having to potentially pay up to 30 million in consequence of unequal pay practices.
And these things don’t just relate to the UK. So over the pond in the US, Google has recently had to settle a multi-million pound equal pay claim for allegedly paying white and Asian employees more than other ethnic groups.
These costs are staggering, and that’s before we even start to think about the greedy lawyers fees that come as part of this. And given that often these claims last for many, many years, those fees will be significant into the hundreds of thousands, if not millions.
Let’s wait for my slides to update.
“So what?” you might say. “These are massive organizations with thousands of employees. Is this going to affect me if I’m a small employer?”
Well, the reality is this can affect employers of all shapes and sizes. It doesn’t matter how big you are. And often, smaller employers are more vulnerable because they may have less well-established pay practices.
These issues have become more commonplace because now there’s much more openness about pay. 10, 15 years ago, people didn’t talk to each other about what they were paid. Now, that absolutely happens, and it’s underpinned by legislation.
The format of this session spares you a deep dive into equal pay law. But fundamentally, this is about people claiming that they do work of equal value to someone of the opposite sex and get paid less than them.
And the courts have been willing to apply a very broad interpretation to what amounts to work of equal value. So we’ve seen nurses comparing themselves to woodworking skills. We’ve seen grave diggers comparing themselves to cooks. We’ve just seen a variety of comparisons.
And if someone’s able to get over that initial hurdle, then the only defense an employer can have is to show that there was a material factor, other than sex, that justified the pay differential. But that’s really very difficult to do.
So what I’d like you to do is have a think about your organization. Could, for example, your HR director say, “Well, I’m not paid as well as the finance director or the head of legal?” And if that’s right, what’s your justification for the pay differential between the two?
One potential defense you can have to these sorts of claims is if you undertake a job evaluation study, a means of formally grading roles and setting salaries accordingly. But many employers shy away from that because once you start looking into those things, you potentially open a can of worms and create evidence that employees can then use to mount claims.
That’s where a law firm can potentially come in. We can partner with your HR team or an external HR provider to undertake investigations under legal privilege so you wouldn’t then necessarily have to disclose that information.
Watch Andrew deliver his session over on Vimeo >>>> DisruptHR Aberdeen 2.0 – April 24 2025 on Vimeo
