Written by JMW Solicitors LLP
A recent study by beqom (‘Study’) has indicated that employees based in the United Kingdom (UK) are becoming increasingly concerned with pay equity and are currently more likely to discuss pay with their workplace colleagues.
The Study has indicted that these concerns have become the focus of employee attention primarily due to the impact of inflation and the Coronavirus Pandemic. With this in mind, a broader discussion is to be had around the laws governing equal pay, the potential impact that such discussions may have, and what this could mean for both employees and employers moving forwards.
Increase in grievances and equal pay queries from employees
The basic starting point is the position of the law on equal pay which encapsulates basic salary, basic wages, pension, working hours, annual leave allowance, holiday pay, overtime pay, redundancy pay, sick pay, performance related pay and benefits. By law, an employer must pay men and women equal pay for doing ‘equal work’ (subject to a number of specified ‘material factors’ which are not analysed for the purpose of this piece). ‘Equal work’ is viewed as work which is of the same, similar or of equivalent value. In practice, this means that an individual must not receive less pay compared to another individual who is (1) of the opposite sex and (2) undertaking ‘equal work’ for the same employer.
With transparency regarding pay increasing and employees more likely to discuss their salaries with those who they share the workplace with, an employers’ failure to comply with equal pay legislation appears increasingly unlikely to go unnoticed. As a result, it is expected that we will see a rise in grievances and queries related to pay over the coming months.
In light of the above, there are a number of steps that employers can take to mitigate potential exposure.
Guidance, provided by ACAS, encourages employers to adopt an equal pay policy and ensure that up to date job descriptions are in place which accurately describe the roles and responsibilities that their employees undertake. Further, consistency when deciding an individual’s pay and their contractual terms and conditions will be of fundamental importance. Where such steps are adopted the likelihood of an employer falling foul of a breach of legislation regarding equal pay is far less.
Where does the employer stand?
Pay has always been a sensitive topic. But, from the employers’ perspective, the question arises as to whether an employees’ discussion and disclosure of information on the same can be the foundation for disciplinary action.
Employees, through an implied term under their contracts of employment, owe to their employer a duty of confidentiality in regard to confidential information. However, broadly speaking, employers would be wrong to assume that the salary details of their employees would be automatically viewed as such. What will be particular importance in establishing whether such conduct is prohibited will be the express wording contained in the employees’ contract of employment.
With that said, even where the contract of employment contains wording expressly prohibiting an employee discussing their salary with colleagues (often referred to as pay secrecy clauses) the Equality Act 2010 prohibits such wording from being legally enforceable.
The position regarding the disclosure of pay information to a third party does differ from the position set out above. An employer can require its employees to keep information relating to pay confidential from people outside of the workplace. This can be achieved by the employer and employee entering into an ‘employee salary confidentiality agreement’, where if breached by an employee, disciplinary action may follow.
There are pros and cons to any such agreement which will need to be weighed up on a case-by-case basis. Broadly, and from a commercial perspective, those outside of the organisation such as competitors, will be unaware of the pay rates offered by the employer. However, any such requirement to enter into an agreement may be perceived by potential candidates as a ‘red flag’ that the employers are not paying their employees a wage that reflects their duties and responsibilities.
Consideration moving forwards…
The impact of pay transparency on the Gender Pay Gap (GPG)
The Department for International Trade’s ‘Gender Pay Gap report 2021 to 2022’ (last updated on 28 November 2022) indicated that the mean difference between men’s and women’s hourly pay across the surveyed organisations was 5.45% during 2022.
There is a general belief that an increase in pay transparency across the workforce would assist in reducing the GPG. Statistically, women are more impacted by a lack of pay transparency than men as they are more likely not to ask for a pay rise due to feeling uncomfortable because of a lack of open conversation (29% of women to 21% of men). With that in mind, an increase in transparency of pay would undoubtably facilitate any further movement to reduce the GPG.
Conclusions to be drawn…
Pay has been, and to a large extent remains, a taboo subject for many but with employees favouring greater transparency and many employers accepting the benefits of the same, secrecy surrounding pay may be a position that alters in the very near future.