Employees can claim equal pay up to six years after leaving workAdd To My Clippings Alt Text

By Tom Heys

Can an equal pay claim be brought as a breach of contract claim in the civil courts? In particular, if an employee left employment over six months ago but has subsequently discovered she was underpaid compared to a man doing equal work, can she bring such a claim?

This was the issue before the Supreme Court in Birmingham City Council v Abdulla and others [2012] UKSC 47.

The 174 claimants in this case worked in roles which were typically performed by women, such as cleaner, carer and school meals assistant. They did not get paid the same bonuses that attached to other roles typically performed by men, such as road sweeper, gravedigger or streetlight attendant.

The claimants would have had arguable equal pay claims against the council in the employment tribunal (ET), and would probably have been successful, but their employment had terminated and the rigid six-month time limit for bringing a claim had expired. If they had tried to pursue ET claims, these would have been struck out.

Therefore, instead of pursuing doomed ET proceedings, the claimants argued their case as a breach of contract claim in the High Court. Their novel argument was that the council had failed to pay them in accordance with the equality clause implied into their contracts by the equal pay legislation. For breach of contract claims, a six-year time limit applies, so their claims would be in time.

This argument was successful in the High Court and in the Court of Appeal. The council made a further appeal to the Supreme Court, but it was rejected by a 3-2 majority (judgment available here).

This means that employers could now be faced with equal pay claims from any former employees who have left within the past six years. Moreover, these will be in a civil court with its punitive costs regime. It will, however, probably be the public sector which will bear the brunt of this. Local authorities and the NHS have been battling major equal pay litigation for many years and this ruling could now open the floodgates for hundreds of former employees to bring a claim.

The impact on the private sector, where equal pay claims are relatively rare, is likely to be less severe. Public sector employers tend to have very transparent practices and pay grades that have been negotiated, agreed and implemented on a national level, making it easier for employees to identify apparent pay inequalities. This is less common in the private sector, where pay disparities often go unnoticed.

The Government has proposed wide-ranging reforms to many areas of employment law, but equal pay has been left more or less untouched. Mandatory pay audits for certain employers that lose equal pay claims are proposed, but in practice these will be of negligible impact – last year there were just 32 cases when an employer lost an equal pay claim.

Equal pay remains one of the most complex and costly areas of employment law for employers and employees alike. Despite equal pay laws being in force since 1975, slow progress has been made in eliminating the gender pay gap which, according to the Chartered Management Institute, is currently not expected to close until 2067.

If the Government moves to close the potential floodgates of the Abdulla decision, let’s hope it takes the opportunity to conduct a pragmatic, root-and-branch review of equal pay law with a view making it simpler, clearer and more effective.

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October 2016