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A landmark decision has confirmed that employees have potentially six years to bring an equal pay claim.

Claims for equal pay can be brought either through an Employment Tribunal or through the ‘ordinary courts’ (i.e. the County and High Courts). Historically they have, however, in practice been brought through the Tribunals. The choice of venue may be of significance, as it was in this case, as an employee only has six months to present an equal pay claim in an Employment Tribunal but six years to bring a claim through the ordinary courts. As a consequence it is, therefore, possible for proceedings to be commenced in time in the ordinary courts after the time for presenting a claim in an Employment Tribunal has expired.

The ordinary courts have, in all cases, the discretion to strike out an equal pay claim, if it could be more conveniently dealt with by an Employment Tribunal. They also have the discretion to refer the claim to an Employment Tribunal and place on hold the court proceedings pending the Employment Tribunal’s decision.

The question the Court of Appeal had to decide in this case was whether the ordinary courts should strike out a claim and, thereby deny the employees in question of a remedy, where the time for presenting a claim in an Employment Tribunal had expired.

The Court of Appeal said that when an ordinary court exercises its discretion to strike out a case the fact that an employee would be deprived of their right to pursue a claim is a relevant factor which should be taken into account and given considerable weight in most cases. Accordingly, in most cases an employee will have six years to bring an equal pay claim.

Following the decision in this case, it will be more important than ever for businesses who acquire employees under TUPE to obtain appropriate indemnities to protect themselves against liability for equal pay claims.

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This case concerned two women who brought claims for equal pay. They had been, and continued to be, paid significantly less than a male employee who carried out similar work to them following TUPE transfers.

The employer successfully argued that that the difference in pay was caused by TUPE and had nothing to do with the sex of the employees. The employer had adopted a standard approach when it awarded pay increases and bonuses to its staff. It also had a practice of not freezing the salaries of its employees.

The EAT held that that the requirement under TUPE to preserve the contractual rights of a particular employee can be a ‘genuine, material, and gender-neutral factor’ to explain a difference in pay. The fact that this may, as it did in this case, result in a particular employee being paid more than other employees was irrelevant.

The EAT further held that the employer was under no duty to ‘narrow the pay gap’ after the transfer, for example by freezing the salary of transferred employees until others had caught up and equalised. The mere ‘effluxion of time’ (or in more common language, the ‘passage of time’) did not change the explanation for the difference in pay.

Case reference: Skills Development Scotland Co Ltd v Miss M Buchanan and Ms P Holland.

The EAT’s decision was based upon the particular facts of this case. An equal pay claim needs a finding of sex discrimination to succeed and there was no such finding in this case because as long as a decision to award everyone a pay rise (and thus perpetuate a pay gap) is not tainted by sex, an employer will be able to establish a defence to an equal pay claim. Had there been a finding of indirect discrimination then the employer would have had to show that there was an objective justification for the difference in pay.

This decision will be a relief for employers who would otherwise be caught between a rock and hard place trying to balance the demands of the competing legislation.

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BIS has launched a new consultation document entitled ‘Consultation on Modern Workplaces’proposing proposes the following changes to UK employment law, specifically family friendly policies and working time regulations:

Even though in recent months changes were planned and then pulled regarding flexible working policies and paternity leave has just extended to allow fathers/ partners to share maternity leave with the mother …. here we go again!

Flexible parental leave
Retaining 18 weeks’ maternity leave for mothers, then reclassifying the remaining maternity leave as ‘parental leave’ and allowing it to be taken by either the mother or the father/partner, or both.

Flexible working
Extending the right to request flexible working to all employees.

Working time regulations
These changes would reflect the recent European cases enabling employees to carry over untaken holiday into subsequent years if they have lost the chance to take paid holiday because of sickness absence (would also apply to maternity/parental leave).

It is proposed that this carry over entitlement would only apply to the amount of leave afforded to employees under EU law, which is currently 4 weeks. So employees would not be entitled to carry over the extra 1.6 weeks they receive under UK employment law.

The government is considering proposals which would allow employers to ‘buy out’ that extra 1.6 weeks which could be construed as making a mockery of it if the argument is an economic one!

Equal Pay
Employment Tribunals that have found an employer to have discriminated on gender in relation to pay may order the employer to conduct a pay audit and publish their results except in some circumstances, such as where an audit has already been conducted.

The consultation is open until 8th August 2011. The Home Office has more details and you can read feedback, get involved and vote on the proposals here.

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