Recently there has been a distinct movement in equal pay claims from the public sector to the private sector and fashion looks to be in the firing line.
What is Equal Pay?
UK law makes it unlawful to differentiate in pay and benefits between men and women. In the absence of a formal pay and grading structure (which is rare in the fashion industry) and where jobs are very different (and not the same work), there is the concept of being paid equal pay for work of equal value. Equal value assesses very different job roles, analysing the various components, demands and skills of the jobs – their remit, supervisory responsibility, budgetary control and autonomy. If this analysis demonstrates the jobs are equal, a UK court could declare them to be of equal value, leading to the assumption that those in the equal roles should be paid the same and receive the same benefits.
2015 & Beyond
Recent developments also heighten the risk of legal challenges for these employers. Claims are being pursued against Asda/Walmart. Headlines such as “Supermarket staff could win millions in equal pay cases” and support for mass claims/class actions by one particular law firm (and others on a no win/no fee basis) shows the potential for more claims of this nature.
In the Asda case store staff (predominantly female) are bringing claims for the same pay as those working in warehousing and distribution (predominantly male). It does not matter that there will be male employees working in stores also. That is no defence to an equal pay claim. The Asda litigation is progressing through the UK courts and is likely to result in at least 18 months of litigation.
Fashion retailers are at risk of similar complaints where there are warehousing and store based employee groups. We are aware of a number of fashion retailers who are conducting audits in order to assess the level and size of their risk.
Another reason for such action is the UK Government will also require large UK employers to publish their gender pay gap (difference in pay between men and women) in the longer term. The Small Business Enterprise and Employers Act 2015 introduced a legal requirement for these new reporting requirements to be implemented by April 2016. Once the new requirement is in place, we anticipate a period within which this mandatory disclosure will have to be provided by employers.
What should businesses be doing?
As a first step, some analysis around the gender profile and work areas within a business is advisable. This will identify the extent to which there is a risk of pay discrimination (even if unintended) because of what might be regarded as “traditional roles”.
It is also a good idea for businesses to undertake some analysis of their pay arrangements and identify pay differentials in particular job roles correlating this to the gender breakdown and profile. Finally this type of investigation and project should be framed carefully, to make clear the scope, analysis and whether legal privilege can be relied upon.
Whether or not businesses takes defensive steps to limit or prevent such claims and/or in anticipation of reporting their pay gap very much depends on the picture gleaned from this analysis and the extent to which there is significant pay differences.
The financial risk can be significant with claims for back pay and a requirement to equalise pay going forward for each employees (and any men in the underpaid roles – so called “piggy back claims). Not only would future pay have to be equalised, but a damages claim can extend to up to 6 years prior to a claim being issued, for back pay plus interest!