Check out the courses we offer
Knowledge Base » Business » What is Equal Pay?

What is Equal Pay?

Last updated on 3rd May 2023

The struggle for equal pay in the UK began 134 years ago when, in 1888, over 200 women and girls went on strike to protest the exploitative working conditions at the Bryant & May match factory. The “match girls” received meagre wages and worked in conditions that endangered the girls’ health, many suffering and dying from a condition known as phossy jaw.

Support for the striking “match girls” triggered public debate about a woman’s place as often a marginalised sector of the workforce. Over the next 80 years, other industrial action and campaigns for equal pay paved the way for important changes in attitudes, and to the law about the treatment of women in the workplace. However, it wasn’t until the aftermath of the 1968 Ford Dagenham women’s strike that the first real change in the law occurred.

By the late 1960s, feminism had begun to become a more influential ideology and the Women’s Liberty (Lib) movement was in its infancy. Against this backdrop, 187 machinists at the Ford Motor Company’s plant in Dagenham, all women, walked out on strike following the discovery that their roles were being graded as unskilled, compared with men doing similar work who were graded higher. The male production workers doing similar work were also being paid an average of 15% more than the female workers. The only significant group of female production workers at Ford were skilled machinists, who were paid less than male toilet cleaners and stores workers.

The four grades for production workers used at Ford Dagenham prior to the strike were:

  • Male – skilled.
  • Male – semi-skilled.
  • Male – unskilled.
  • Female.

Barbara Castle, the Employment Minister at the time, was brought in to help negotiate a settlement. After four weeks on strike, the machinists voted to return to work following an offer of 92% of a male grade rate. The women were only regraded following a further six-week strike, sixteen years later in 1984. However, the strike and the interjection of Barbara Castle was the catalyst for the Equal Pay Act 1970. The Ford Dagenham women’s strike was depicted in the 2010 film Made in Dagenham.

What is equal pay?

Equal pay is about ensuring that men and women are paid equally for doing comparable, work; that is, work that is equal in terms of grade and/or value. Although the principle of prohibiting less favourable treatment between men and women in terms of pay and conditions is simple, equal pay concepts have historically been complex, as what equal pay actually entails and how it is applied in practice has proven to be difficult.

Equal pay extends beyond the salary/rate offered for the role; it covers the whole remuneration/reward package – that is, all the elements of earnings. In addition to wages, forms of remuneration include overtime pay, bonuses, travel allowances, company shares, insurance, and other benefits. A basic wage is often only a small part of a worker’s full remuneration, so it is important to factor all forms of pay into the equation.

There is widespread discrimination in pay systems, with many women being paid less for work that is the same or similar, or of the same value, as male colleagues’ work. This is usually not intentional and there can be many factors within pay systems that lead to inequalities.

For example:

  • Individuals being appointed to different points on the pay scale.
  • Different job and grade titles for virtually the same jobs.
  • Male jobs having disproportionate access to bonus earnings.
  • Women having less access to high-paid shift and overtime work.
  • Performance-related pay being unfairly awarded.
  • Women not receiving the same access to training.
  • Sex bias in analytical job evaluation schemes grading women’s jobs lower.

The gender pay gap is different from equal pay. The gender pay gap represents the difference in the average hourly earnings of men and women across a business regardless of the role they do. The gap can be impacted by several factors, including a greater male representation at senior levels. As a result of different jobs paying different rates, and the number of men and women performing those jobs, a gender pay gap may exist. The 2017 Gender Pay Gap Regulations in the UK require employers with greater than 250 employees to report their gender pay gap in line with specific criteria. Gender Pay Reporting and the analysis of the data brings transparency to the different experiences of men and women in the organisation.

Data from the UK Government’s Office for National Statistics (ONS) for full-time employees in 2021 shows that, on average, men were paid 7.9% more than women, up from 7% in 2020. The gap in 2019 before the COVID-19 pandemic was 9%, so overall there is a downward trend. Among all employees, the gender pay gap was 17.4% in 2019, 14.9% in 2020 and 15.4% in 2021. The gender pay gap is higher for all employees than for full-time employees because women fill more part-time jobs, which have lower hourly median pay.

Equal Pay

What is the equal pay act?

The Equal Pay Act 1970 introduced an “implied equality clause” into all employees’ contracts. The aim of the Act was to eliminate separate lower women’s rates of pay. All such rates had to be raised to at least the lowest male rate over a five-year period between 1970 and 1975. However, the Act did not come into force until 29 December 1975, the same day as the Sex Discrimination Act 1975. Both Acts worked in conjunction, section 8 of the Sex Discrimination Act 1975 specifically referring to the Equal Pay Act 1970.

The Equal Pay Act 1970 gave an individual a right to the same contractual pay and benefits as a person of the opposite sex in the same employment, where the man and the woman are doing either of the following:

  • Like work.
  • Work rated as equivalent under an analytical job evaluation study.

The first effect of the Equal Pay Act 1970 was to remove separate lower women’s rates of pay. Before 1970, it was common practice in the private sector and some parts of the public sector for there to be separate, and lower, women’s rates of pay. Some employers got around the legislation, for example, by raising the women’s rates to the lowest male rate, even when the women’s jobs were more demanding than the men’s, or by creating different job titles for the women. Despite these strategies, full-time women’s average earnings compared to men’s rose by 5%, from 72% to 77%, over a five-year period in the 1970s, the biggest ever increase in this ratio.

The UK’s membership of the then European Economic Community (EEC), now the European Union (EU), had a significant impact on equal pay law. Following legal action by the Commission in 1982, the UK had to amend the Equal Pay Act 1970 so that it also applied to cases where men and women did “work of equal value”. “Work of equal value” can mean a job that is the same or similar, as well as a job that is not the same but is of equal value. This distinction is important because women’s and men’s work may involve different types of qualifications, skills, responsibilities, or working conditions, yet be of equal value, and therefore merit equal pay.

In 2010, the Equal Pay Act 1970, the Sex Discrimination Act 1975 and other pieces of equality legislation were consolidated into the Equality Act 2010, although the law on equal pay remains substantially similar.

Equal pay law provides a way of ensuring that men and women receive the same pay and terms for doing comparable work. Both male and female workers are covered by equal pay legislation.

This includes:

  • Employees.
  • Agency workers and casual workers, such as a bank nurse, supply teacher, etc.
  • People who are personally providing a service even though they might consider themselves self-employed.

It does not matter how long the employee has been employed, or whether they are in full-time or part-time employment. The Equal Pay Act, subsequently the Equalities Act, applies to both full-time and part-time employees. If a female part-time employee is doing equal work to a male full-time employee, she should get equal pay on a pro-rata basis. This means that they should both be on the same hourly rate.

However, despite the legislation, the fight for equal treatment of men and women in the workplace continues. The general view among stakeholders is that equal pay law has not been effective in fully addressing equal pay issues or in closing the gender pay gap. The Guardian newspaper reported figures from law firm DLA Piper which show that employment tribunals in England and Wales still receive an average of 29,000 equal pay claims each year. Equal pay law only addresses unequal pay between individual women and men doing equal work for the same employer.

Why is equal pay important?

Pay inequality applies disproportionately to women during their working lives. It has immediate and long-lasting implications for the individual, and across society as a whole.

Equal pay matters because it is a glaring injustice and subjects millions of women and families to lives of entrenched poverty and opportunity gaps. Where pay is unequal, standards of living are restricted and reduced levels of pension contributions lead to a higher rate of relative poverty later in life. As more women face economic hardships because of COVID-19, and now the cost of living crisis, the fight for equal pay takes on a new sense of urgency because those who earn the least are most damaged by income discrepancy. Women workers’ average pay is generally lower than men’s in all countries, not just the UK, and for all levels of education, and age groups.

For employers, in addition to complying with legislation and avoiding the legal costs of pay discrimination claims, losing an equal pay claim at a tribunal is expensive.

Paying equal pay means that the employer can:

  • Attract and retain the best employees because they know that they are receiving fair and equal remuneration for their work.
  • Improve motivation and productivity, for the same reasons.
  • Reduce recruitment costs by retaining employees for longer.
  • Enhance the organisation’s image and reputation as a fair employer.

How to know if you are being paid equally

If an employee has reason to believe they are subject to inequality of pay on gender grounds, they will be legally permitted to ask other members of staff about how much they earn and what benefits they get. The Equality Act 2010 limits the enforceability of what is often called secrecy or gagging clauses that some employers use to restrict any discussions about pay packages and differentials. The Act has made it unlawful for employers to discipline workers who make certain disclosures about their pay.

An employee is also entitled to ask their employer directly for general information about other people’s pay and contractual benefits, and the reasons for any differences, although the employer will be required to preserve the anonymity and confidentiality of other employees for data protection reasons. If the employer fails to answer the employee’s questions within a period of eight weeks, or answers in a false or vague way, then, should a claim be made, a tribunal may draw a conclusion, including an inference that the employer is in breach of the equal pay legislation.

In the context of an equal pay claim, where a person doing equal work is able to show that they are receiving less pay or other less favourable terms in their employment contract, or identifies a contract term from which a comparator benefits and they do not, the employer will be required to show the reasons for this. If the employer is unable to demonstrate that the difference is due to a material factor that has nothing to do with the sex of the comparator or complainant, then the equality clause will take effect and the employee’s claim is likely to be upheld.

In most instances, people doing the same or similar job, or work of equal value, should get equal pay, regardless of their gender. Where there are differences in pay or other terms, to successfully defend a claim an employer must identify the material factor(s) relied upon and be able to prove the following:

  • It is the actual reason(s) for the difference in pay rather than a sham or pretence.
  • It is causative of the difference in pay between the complainant and their comparator.
  • It is material, that is, relevant and significant.
  • It doesn’t involve either direct or indirect sex discrimination.

This essentially means that even where an employee is able to identify a comparator at work who is better paid than them, or who works under more favourable contractual terms, these differences might be permitted, provided the employer can satisfy the four conditions above.

Any personal differences between the employees concerned, such as expertise and experience, may be material factors. In this context, an employer could argue that it was necessary to pay someone else more because of a staff shortage, provided they can prove difficulties in either recruiting or retaining staff to do the job being done by the higher-paid person. Other examples of material factors could include geographical differences to reflect a higher cost of living in different areas.

The employer could also include things like someone working unsocial hours, rotating shifts and night-working. For example, if an employer can show that the only way to ensure adequate staffing of unsocial hours is to pay a shift premium, even if more men than women work those shifts and therefore receive the additional payments, the material factor defence may succeed.

What to do if you are not being paid equally

In order to establish the right to equal pay under the Equality Act 2010, a woman, or a man, must identify a “comparator” of the opposite sex, who works in the same employment and then establish that she/he and the comparator are either:

  • Employed on “like work”.
  • Employed in jobs that are of “equal value”.
  • Employed in jobs that have been “rated as equivalent”.

An employee can compare themselves with a predecessor in their job. If an employee has a reasonable suspicion that their predecessor of the opposite sex was paid more than them, they can either apply to an employment tribunal for a disclosure order requiring the employer to release the relevant information, or seek the former employee’s salary details through an Equal Pay Questionnaire. However, an employee cannot compare themselves with a successor to their job.

If, having made inquiries and drawn comparisons, an employee is able to identify someone at work of the opposite sex or even someone who used to work for the same employer, who was paid more for the same job, or benefited from more favourable terms and conditions, they may have a potential claim for equal pay. In these circumstances, employees are advised to discuss the matter first with their employer, but if the matter cannot be resolved informally, they should raise a formal grievance in writing using their employer’s internal grievance procedure.

It is also advisable to send the employer an Equality Act Questionnaire either before or at the same time as raising the grievance. Sending a questionnaire will allow the employee an opportunity to ask their employer for certain information such as what pay the comparators receive. The employer may be reluctant to disclose all of this information but this silence could be used against them at a tribunal.

In cases where an equal pay issue cannot be resolved internally, the employee can then go on to issue tribunal proceedings, although they will first be required to notify ACAS that they intend to bring a claim through the ACAS early conciliation procedure. Only after this stage has been exhausted can the matter proceed to a tribunal hearing for determination of the facts.

Workforce with equal pay

Examples of equal pay rulings

In the UK, we have had equal pay legislation for 52 years, with the introduction of the Equal Pay Act in 1970, and strengthened by the Equalities Act 2010, so you might be forgiven for thinking that breaches of the legislation are now a rare occurrence; however, this is not the case. As recently as the 2020s, many cases of pay discrimination are still being taken to tribunal.

For example, all of the “big four” supermarkets, as well as other retailers, have seen equal pay claims submitted to an employment tribunal in recent years. The majority of these cases involve workers, or former workers, who work in the supermarket stores, with a higher proportion of female workers, arguing that they have not been paid equally compared to colleagues in the distribution centres of the business, where there is usually a higher proportion of male workers. Their argument is that they carry out work of equal value to these colleagues and that, as a result, their pay should be equal.

In 2016 over 35,000 Asda store staff, mainly female, took an employment tribunal case against Asda claiming that their work was of equal value to that of workers in the distribution centre who were predominantly male employees. They claimed that there was no material factor justifying the difference in pay arrangements, that is that common terms were in place, whereas Asda argued that the comparison did not apply as they were different departments and pay rates were justifiably different.

The Employment Tribunal (ET), Employment Appeal Tribunal (EAT) and then the Court of Appeal dismissed Asda’s defence, and in the Court of Appeal, Lord Justice Underhill in his judgment ruled that for both retail workers and distribution workers, Asda had “applied common terms and conditions wherever they work”.

The case was a watershed moment for the rest of the retail industry, particularly those defending their own equal pay claims, such as Sainsbury’s, Tesco, Morrisons and Next, many of which have similar staffing models and pay structures. The judgment made it harder for the supermarkets and retailers to argue that it is not possible to compare store and distribution workers.

However, in March 2020 Sainsbury’s claimed that store staff had provided incorrect job titles to the employment tribunal, which it argued invalidated their claim, but the tribunal ruled that Sainsbury’s argument had “no proper factual basis” and that the organisation had acted unreasonably.

In January 2021, Tesco was ordered by the Employment Appeal Tribunal to disclose information it holds about how much its warehouse staff are paid, evidence that was key to the equal pay case brought against it by shop floor workers. Some 3,700 staff were involved in the Tesco case. In June 2021, thousands of current and former Tesco employees won the fight in their equal pay dispute with the supermarket, with the European Court of Justice ruling confirming that UK shop floor workers can be compared to their colleagues in distribution centres.

Equal pay cases are not only restricted to retail, or to roles at the lower end of the pay scale. In 2021, Paribas London was taken to tribunal. The Claimant, a woman, was hired with a salary of £120,000. A male colleague started in the same role later that year with a salary of £160,000, the “Comparator”. Over five years, the Comparator was awarded bonuses of approximately £237,000. The Claimant’s bonuses over the same period amounted to around £33,000.

The Claimant raised concerns as to the above, which the bank failed to address. The Claimant was successful in her claim of sex discrimination relating to the bonuses she was awarded. Whilst the bank sought to justify the difference in bonuses awarded on the basis of performance review, the employment tribunal found that the Claimant’s poor performance reviews were victimisation based on the breakdown of the working relationship with her manager.

The Respondent sought to establish the “material factor defence” to justify the significant differences in bonuses awarded to the Comparator. They stated that the money was a necessary incentive to headhunt the Comparator and incentivise him to leave his previous employer. The Respondent’s defence failed. The tribunal found that the pay differential was attributable to gender. The bank was also ordered to carry out an equal pay audit under the Equality Act 2010 (Equal Pay Audits) Regulations 2014 by 30 June 2022; this was the first time the ET had made such an order.

How to provide equal pay

Men and women carrying out equal work for the same employer are entitled to the same terms and conditions of employment. This right derives from both European legislation, Article 157 of the EU Treaty, previously Article 141 of the EC Treaty, and from the domestic Equality Act 2010, formerly contained in the Equal Pay Act 1970.

The equal pay provisions apply to anyone, male or female, engaged under “a contract personally to execute any work or labour”. This is a wider definition than that of an “employee” found in the Employment Rights Act 1996 and extends the scope of the equal pay provisions to the vast majority of workers, including the self-employed. For the avoidance of doubt, it includes:

  • Full-time workers.
  • Part-time workers.
  • Permanent workers.
  • Fixed-term workers.
  • Temporary workers.
  • Casual or bank workers.
  • Self-employed / contract workers.
  • Zero-hours contract workers.

From 1 October 2005, the equal pay provisions have also applied to officeholders such as central government or local government officials, trustees etc.

The equal pay provisions cover all aspects of the contractual terms and conditions of employment, not just pay.

They include:

  • Basic pay.
  • Hours of work.
  • Non-discretionary bonuses, such as attendance allowance and target/productivity bonus.
  • Overtime rates and allowances.
  • Performance-related pay and benefits.
  • Severance and redundancy terms.
  • Access to pension schemes.
  • Benefits under a pension scheme.
  • Sick pay.
  • Annual leave entitlement.
  • Other benefits, such as company cars, travel allowances, healthcare, etc.

To ensure that there are no differentials in pay between female and male workers, employers should regularly carry out equal pay audits. When conducting an equal pay audit, employers need to consider the three categories of equal work used to determine whether or not any comparator of the opposite sex is in fact undertaking the same or equivalent work:

  • Like work.
  • Work rated as equivalent.
  • Work of equal value.

Each of these has a different definition in law but, initially, an employer could consider the following factors of the role:

  • Tasks and duties.
  • Skills and knowledge.
  • Responsibility and initiative.
  • Physical demands and risk.
  • Emotional stresses and mentality.

The majority of equal pay claims rely on the worker and their comparator doing different jobs which are of “equal value”. Deciding whether one job is of “equal value” to another is far from an exact science. If a worker brings an equal pay claim, the employment tribunal will generally appoint an independent expert in the field of job evaluation.

The expert will analyse the worker’s job and their comparator’s job in careful detail, looking at a wide range of factors such as:

  • Knowledge required to do the job.
  • Experience and training required to be appointed to the role, and in-post learning.
  • Responsibility for planning and organising work.
  • Responsibility for quality and standards.
  • Responsibility for health and safety.
  • Responsibility for equipment and resources.
  • Responsibility for supervision, training, assessing etc.
  • Responsibility for data.
  • Security and confidentiality.
  • Responsibility for care of others.
  • Concentration, accuracy and memory.
  • Emotional demands.
  • Decision-making.
  • Freedom to act.
  • Written and verbal communication.
  • Working relationships.
  • Interpersonal skills.
  • Physical effort.
  • Physical skills and manual dexterity.
  • Environmental demands.
  • Hazards.

When examining comparable roles, it is probably best to ignore job titles, and instead look at the specific duties of the work. Employers could also use a job evaluation scheme to provide objective assessment, and perhaps generate a scale or structure for pay. To avoid potential unfairness, it is sensible to have more than one person assess each role, and for the panel to be diverse and impartial.

Once groups of equal work have been identified, the employer should gather the pay data for each individual within that group and then find the average hourly rate for the women in the group, and the average hourly rate for the men in the group. There are benefits as to whether the mean average or the median average is calculated, and this will depend upon whether the aim is to identify extremely high earners or whether it is to assess the differences across the group. This exercise should establish how the figures compare and whether there is much of a gap between the averages.

A pay gap isn’t necessarily discriminatory, nor is it automatically unlawful. However, it may be that a procedure or policy is impacting pay disproportionally. If this is the case, the business is exposed to an equal pay claim, and is ultimately holding back the potential of its staff. It is advisable to carry out gender impact assessments on all policies and procedures.

There is no point for employers to carry out an audit or impact assessments unless they intend to use the results to take action. If the difference between the results is minimal, then these should be able to be fixed quite easily. However, if the difference is significant, an employer should start by looking at the factors that determine pay within their organisation.

Factors to consider might include:

  • How does the organisation determine starting pay for each pay group? Is it based upon experience or age?
  • How are pay increases decided? Does it depend upon performance or results?
  • Any bonus payments – are they based upon targets or working time?

Ultimately, an employer needs to be confident that any discrepancies between the results, and the barriers to those higher rates, have nothing to do with the gender of the employees. If gender is relevant, the employer will need to address this.

Employers can minimise the risk of an equal pay claim if they have transparent and structured pay and benefits policies that are reviewed regularly to check for any pay disparities between men and women. Employers should make sure that their pay structure is transparent. Employees should be able to understand how their pay is calculated and how they can move up the pay structure. Ideally, one simple pay structure should be used across the organisation.

Introducing an equal pay policy or an equal pay section within organisational remuneration policies will not only set out the organisation’s position clearly for employees, but it will also be a helpful document should an employer need to defend an equal pay claim.

Happy Workforce

What happens if an equal pay claim is brought by a worker?

Should an employee(s) bring a claim that they are not receiving equal pay, an employer should take action at an early stage. A good starting point is to review the job history of the male or female worker and the person of the opposite sex with whom they are comparing themselves (the “comparator”). As an equal pay claim can span a period of six years, it is important to know what has happened during this time, particularly to the worker. Have they changed job roles in the previous six years? Have they had a career break? Has their employment been the subject of a TUPE transfer? Exploring these issues fully at the outset is extremely important so that the employer can be very clear about the period that may present a threat.

Then examine exactly what “terms”, typically pay and benefits, those female and male workers have benefited from. The best starting point is to compare pay slips. Be very clear about the differences in basic pay, but also look at bonuses etc. Think also about any benefits that do not show on a pay slip, for example annual leave entitlements etc. This process will establish if there is a difference in pay at all, and if there isn’t any difference then it will look into why the comparator has been better paid than the worker. For example, inherited employees gained through a TUPE transfer might explain pay differences. Material factors are fact-sensitive and can often be difficult to prove.

Other material factors can include, for example:

  • Different hours of work.
  • Market forces.
  • Rewarding productivity.
  • Geographical reasons.
  • Recognising length of service.
  • Recognising additional responsibilities.
  • Ring-fencing / pay protection.

If there is a reason for the pay disparities, then take legal advice on how to explain this to the worker. An employer should always set out their responses to the worker using the organisation’s own grievance process. All communication between the worker and the employer may be used during any employment tribunal should the case go to that stage, so an employer would be advised to take legal guidance for all communication during the process. An employment lawyer will advise an employer on what they should and should not say, and will help the employer to prepare careful responses to any grievances and/or Equality Act Questionnaires.

There is a time limit of six months for bringing a claim in an employment tribunal, commencing from when the period of work or employment ended. Equal pay claims can also be brought in the civil courts within a period of six years. The way in which time limits operate in equal pay claims is complex, particularly where a worker has changed jobs, their contract has been varied or replaced, they have worked under a succession of contracts, or their employment has been transferred under TUPE. There are also special rules concerning workers who are incapacitated and where discrimination has been “concealed”. For example, a woman who is taking maternity leave, or who has returned from maternity leave, is entitled to receive the benefit of any pay rises she would have received had she been at work during her maternity leave. This is a stand-alone right. If a woman is denied performance bonuses while on maternity leave, she may have a claim for sex discrimination.

If a worker successfully brings an equal pay claim, they can recover:

  • Back pay – that is the difference between what the worker received and what their comparator received. The maximum period for which back pay can be awarded is six years, but in some cases awards of back pay can go back further. Compensation can also include interest. Also, the employment tribunal can increase or decrease compensation by up to 25% if either the employer or the employee has not complied with the ACAS Code of Practice on Grievances.
  • A declaration that the worker is entitled to receive the same pay and benefits as their comparator in future. This will ensure that employers pay the worker correctly going forwards.

Final thoughts

In the 19th and 20th centuries, women all around the UK took a stand against inequality in pay, and these disputes are still taking place today in the 21st century. Equal pay should be a person’s entitlement to the same wage as someone doing work to an equal value, irrespective of their gender.

Equality and Diversity Awareness Course

Equality and Diversity

Just £15

Study online and gain a full CPD certificate posted out to you the very next working day.

Take a look at this course

About the author

Megan Huziej

Megan Huziej

Megan has worked with CPD Online College since August 2020, she is in charge of content production, as well as planning, managing and delegating tasks. Megan works closely with our writers, voice artists, companies and individuals to create the most appropriate and relevant content as well as also using and managing SEO. She gained her Business Administration Level 3 qualification over the duration of being at CPD Online College as well. Outside of work Megan loves to venture to different places and eateries as well as spending quality time with friends and family.

Similar posts