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Job evaluation has particular significance when it refers to the achievement of equal pay for work of equal value between women and men – the main focus of this chapter. But the approaches to achieving equal pay covered by the chapter are just as applicable to other forms of potential pay discrimination including between people of different races, religions, ages and sexual orientations, and those with disabilities and those without.
The gap between the pay of men and women is created by a number of factors in addition to direct discrimination between the base pay rates of men and women for like jobs. The causes of inequality also include other aspects of sex discrimination such as the fact that women tend to be clustered towards the bottom of organizational hierarchies and pay ranges while men tend to be clustered towards the top. The UK Equal Pay Task Force (2001) expressed the view that pay discrimination only contributed to 25 to 50 per cent of the pay gap. To reduce the pay gap it is therefore necessary to address issues concerning equal opportunity, pay progression systems, fixing rates of pay on appointment or promotion, and deciding on rates of pay when returning to work after pregnancy. But it is still important to prevent direct pay discrimination. Job evaluation has a major part to play in this by establishing when jobs are equal in value and should therefore be paid equally and by underpinning equal pay reviews designed to analyse the size of pay gaps and assist in the diagnosis of their causes.
The role of job evaluation in achieving equal pay in the UK is carried out within the framework of equal pay law as summarized in the first part of this chapter. The next four parts deal respectively with how to avoid discrimination in job evaluation, defending an equal pay claim in the UK, managing the risk of an equal pay claim, and conducting an equal pay review.
Equal pay law in the UK
The Equal Pay Act (1970) ended the previously common practice of employers paying men and women different amounts of money for doing jobs that were either the same or very similar. It became unlawful to operate separate male and female pay scales or to pay men and women differently for doing jobs that should have been paid at the same grade when a job evaluation system was in operation. Later, in 1983 after the UK joined the European Union, it became possible for employees to pursue claims in an employment tribunal when they believed that their work, despite being different in nature from that of a comparator of the opposite sex, was nonetheless of ‘equal value to his or hers’. The relevant law is now all found in the Equality Act 2010. It applies both to men and to women, but in practice the large majority of cases are brought by or on behalf of women.
Aside from these three headings under which a claim can be brought (ie like work, work that has been rated as equivalent, and work of equal value), the Equality Act sets out the major defences that are available to employers. The most widely deployed is known as the ‘material factor defence’ which involves satisfying the tribunal that the difference in the level of payment between the claimant and her comparator is genuinely explained by factors that have nothing to do with gender.
Partly, if not largely, as a result of this law the ‘gender pay gap’ between male and female workers in the UK has declined from 37 per cent in the early 1970s to around 18 per cent today, depending on how it is measured. The reasons for its persistence despite the presence of equal pay law are widely debated, a number of distinct and plausible explanations having been put forward. One possibility is the requirement that the law places on women to challenge their employers either by threatening or actually taking legal action. This is a difficult path for any employee to take and one that, quite understandably, most are reluctant to embark on. Moreover, in many workplaces quite strict confidentiality rules have the effect of deterring people from telling their colleagues about the true level of their earnings. As a result, even if someone was willing to challenge unequal payments between men and women, their ability to do so effectively has been seriously curtailed.
Important reforms aimed at reducing this barrier and putting pressure on employers to act proactively in respect of equalizing pay are going to be phased in over a number of years after 2016. These will eventually require all organizations employing more than 250 people to undertake equal pay audits and to publish details of any gender pay gap among their workers on their websites. Not only will this make it much harder for employers to hide details of any gender pay gap that they operate, but it may in many cases simply serve to alert them when they are paying unlawfully in a manner which is legally difficult to justify. The new law is thus likely to have the effect of further reducing the pay gap between men and women.
Defending an equal pay claim in the UK
The two most common grounds for defending a claim in the UK are (1) that the work is not equal and (2) that even if it is equal, there is a genuine material factor that justifies the difference in pay. Employers cannot defend equal value cases on the grounds of the cost of implementation or the effect a decision could have on industrial relations, and part-time working per se cannot provide a defence to a claim. An employment tribunal can ask an independent expert to analyse the jobs and report on whether or not they are of equal value.
Proving that the work is not equal through the job evaluation study defence
The onus is on the employer to prove that the complainant is not carrying out like work, work rated as equivalent or work of equal value when compared with the comparator. If the employer invokes job evaluation to provide support to a claim that the jobs are not equal (the job evaluation study defence), the scheme must be analytical, unbiased and applied in a non-discriminatory way. The ‘job evaluation study defence’ applies only where applicant and comparator jobs are covered by the same job evaluation scheme.
Analytical means that the scheme must analyse and compare jobs by reference to factors such as, in the words of the UK Equal Pay Regulations, ‘effort, skill, decision’. Slotting jobs on a whole-job comparison basis is not acceptable as a defence. The legislation and case law does not specify that a point-factor or a scored factor comparison scheme should be used but even if an ‘analytical matching’ process is followed a tribunal may need to be convinced that this is analytical within the meaning of the Act and has not led to biased decisions.
The genuine material factor defence
UK law provides for a case to be made by the employer that there is a ‘genuine material factor’ creating the difference between the pay of the applicant and the comparator that can be objectively justified. A genuine material factor could be the level of performance or length of service of the comparator, which means that he or she is paid at a higher level than the applicant in the pay range for a job, or it could be the need to respond to market rate pressures. But this only applies if the basis for deciding on additions to pay and the process of doing so are not discriminatory.
Pay differences arising from market pricing can possibly be treated as genuine material factors as long as they are ‘objectively justified’. In the case of a claim that market pressures justify unequal pay the tribunal will need to be convinced that this was not simply a matter of opinion and that adequate evidence from a number of sources was available. In such cases, the tribunal will also require proof that the recruitment and retention of the people required by the organization was difficult because pay levels were uncompetitive.
Managing the risk of equal pay claims
Some organizations in low-risk situations may be convinced that they are doing enough about ensuring equal pay without introducing job evaluation. Others have decided that because their business imperatives are pressing they are prepared to accept a measure of risk in their policy on equal pay, especially when they are aware that in the private sector at least, equal pay claims are much less frequent. Some, regrettably, may not care. But if there is some risk then action needs to be taken to minimize it. Successful equal pay claims can be hugely expensive, especially in UK public-sector organizations with powerful and active trade unions. Equal pay risk management may therefore involve using a non-discriminatory job evaluation scheme and conducting equal pay reviews as described in the final section of this chapter. Equal pay risk assessment involves considering two factors: (1) the risk of having to defend an equal pay claim and (2) the risk of a claim being successful.
Assessing the risk of a claim means first analysing the extent to which there is unequal pay and if it does exist, diagnosing the cause(s). These could be any of the following:
· different base rates of pay for work of equal value;
· disproportionate distribution of men or women at the upper or lower part of a pay range or an incremental scale, bearing in mind that this is a major cause of unequal pay;
· men or women placed at higher points on the scale on appointment or promotion;
· men or women receive higher merit or performance pay awards or benefit more from accelerated increments;
· market supplements applied differentially to men or women;
· ‘red or green circling’ applied in a way that results in pay discrimination between men and women doing work of equal value or like work;
· a discriminating job evaluation scheme in terms of factors or weightings or the job evaluation scheme is applied in a discriminatory way.
The best way to make this assessment is to carry out a formal equal pay review. If an organization is unwilling or unable to take this step, it should at least carry out an analysis of the pay of men and women carrying out like work to identify the existence and cause of any unjustified differences.
Secondly, assessing the risk of a claim means considering the possibility of an individual initiating action on their own or trade unions taking action on behalf of their members. Individual actions may come out of the blue but the individual may have raised an equal pay grievance formally or informally and line managers should understand that they must report this immediately to HR or senior management. A clear indication of trouble brewing in the UK is when an employee under the Employment Act 2002 submits an Equal Pay questionnaire to request information about whether their remuneration is equal to that of colleagues. Although trade unions are most likely to lodge questionnaires on behalf of their members, individuals can still do so independently by obtaining advice from the Equal Opportunities Commission (available on their website). The likelihood of trade union action will clearly be higher when there is a strong union with high penetration in the organization, which is often the case in the public sector. But any union member can seek help from her or his union. Even if the union is not recognized for negotiating purposes it can still provide support.
Equal pay reviews and job evaluation
Equal pay reviews establish whether any gender-related pay inequities have arisen, analyse the nature of any inequities, diagnose their cause or causes and determine what action is required to deal with them. In the UK they are mandatory in civil service departments and agencies.
Equal pay reviews take place in three stages:
1. Analysis: the collection and analysis of relevant data to identify any gender gaps.
2. Diagnosis: the process of reviewing gender gaps, understanding why they have occurred and what remedial action might be required if the differences cannot be objectively justified.
3. Action: agreeing and implementing an action plan that eliminates any inequalities.
Job evaluation can play a major part in the analysis stage. The analysis options are:
· Like work – this means identifying jobs anywhere in the organization where the work is the same or broadly similar. When there is no job evaluation this is the only type of equal work comparison that can readily be made. Although this should be a straightforward comparison there are potential pitfalls, such as over-reliance on unrepresentative job titles. If existing job titles are not a good guide, it might be necessary to re-categorize jobs in order to arrive at who is doing ‘like work’.
· Work rated as equivalent – this means work that has been rated as equivalent using the organization’s own analytical job evaluation scheme. Clearly analyses can only be readily applied where the organization has a job evaluation scheme that covers the whole organization.
· Work of equal value – this is the ‘catch all’ in equal pay legislation. It means that an equal pay claim can be brought by any employee where they believe that their job is of equal worth to any other role in the organization that is occupied by someone of the opposite sex. As with the ‘work rated as equivalent’ test the only organizations that can readily conduct analyses under this heading are those with an organization-wide job evaluation scheme that enables different types of jobs to be compared using criteria that apply equally across the organization.
Using job evaluation
If job evaluation is used on an organization-wide basis it is possible to conduct pay gap analyses that meet all three equal work categories. This can be done by conducting both a like work and an organization-wide comparison between the pay for men and women in the same grade irrespective of their occupational groups. This is because where organizations use analytical job evaluation, different types of jobs on the same grade defined in terms of a range of job evaluation scores will generally be regarded as being of ‘equal worth’, thus enabling a pay gap analysis that covers all employees in the same grade.
However, this is unlikely to be a satisfactory assessment of equal worth where bands or grades are so broad that they include jobs with a wide range of responsibilities and skills. Where this is the case, it may be necessary to split the grades/bands into narrower groups. This can be done fairly easily using a point-factor scheme’s total job scores, but will not be so straightforward where other job evaluation techniques have been used (eg matching), without some adaptation to the scheme or alternative approach to deriving additional levels. Of course, the type of job evaluation approach used also impacts on the perceived robustness of the equal worth comparison in the first place.
Reference
Equal Pay Task Force (2001) Just Pay: Report of the Equal Pay Task Force to the Equal Opportunities Commission, Manchester, EOC