Pay Gap in UK Firms

Introduction

The issue of pay parity is an important aspect of gender justice and an important issue in the context of women and employment equity (Krahn, et al., 2007). The lack of pay parity or pay equity is considered to be the “most glaring indicator of gender inequality in the labour market” (Krahn, et al., 2007, p. 206). In other words, if women are not paid equally to men for work of equal value provided, then gender justice is not achieved, or there is lack of equality.

This report explores the issue of pay parity in context of gender justice with a focus on women and employment. The report discusses the law, both UK law as well as the relevant European Union law, which is related to the issue of pay parity for women. The report then goes on to discuss the practice developed by the courts in the UK and Europe. This reflects the growing jurisprudence in the UK related to the issue of pay parity. The report also considers empirical data on how the practice has impacted the practice of the firms in the UK and whether pay parity is being achieved in the UK firms and whether the UK firms are impacted positively by the practice developed by the courts. On the basis of literature review related to practice developed by courts and the actual practices in the UK firms, this report finds that there is still a lack of pay parity in the UK and the firms in the UK have not been able to achieve pay parity in the true sense.

Topic

Gender justice is a part of the wider discussion on equality. Within the field of gender justice, the issue of pay parity is one of the issues that has come to become a significant indicator of gender justice in the area of women and employment (Hepple, 2010). Lack of pay parity in the UK is a reported fact based on empirical data (Krahn, et al., 2007; IDS, 2008). Due to the lack of pay parity, one view is that there is systemic discrimination at the workplace because compensation is one of the areas that can depict employment equity at the workplace (Agocs, 2002). The UK has taken some steps to address this problem, starting with the Equal Pay Act 1970, which was specifically related to pay parity between women and men, and the Equality Act 2010, which is a more comprehensive law on anti-discrimination in the UK. UK’s membership of the European Union means that the laws made at the European Union also are applicable at this time. These include pay parity provisions in the Treaty of Functioning of the European Union.

The purpose of these legislations is to reduce inequalities and prevent victimisation at workplace (Hepple, 2010). The law seeks to achieve objectives of gender equality through pay parity provisions, regardless of the nature of employment being in the private or public sector (Hepple, 2010). The concern is that despite these provisions in the law, there is still lack of gender pay parity at workplaces (IDS, 2008). This brings attention to the issue of whether the legislations are effective at driving practices within the firms.

Law

With reference to women and equal pay, the relevant domestic legislations are the 1970 Equal Pay Act, and the 2010 Equality Act. The Equal Pay Act 1970 is one of the anti-discrimination legislations enacted by the British Parliament prior to the passage of the Equality Act 2010. The Equality Act 2010 has been enacted to respond to certain areas of discrimination, which are treated as protected characteristics under the Act. The Act seeks to reduce socio-economic inequalities and prevent victimisation and discrimination at workplace, where such discrimination may be related to one or more protected characteristics, including, race, gender, or sexual orientation (Hepple, 2010). In the context of gender as a protected characteristic, the Equality Act 2010 seeks to gender equality, regardless of whether the employment is in private or public sector (Hepple, 2010). Gender pay parity is an important area of concern in the context of gender justice (McColgan, 2011).

As the UK is also a member of the European Union, the legislation and directives of the European Union are also applicable. In this context, the European Union law specific to this issue is contained in the Treaty for the Functioning of the European Union (TFEU), Article 157 (1) and the Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the Implementation Of The Principle Of Equal Opportunities and Equal Treatment of Men and Women in Matters of Employment and Occupation (Recast Directive). Article 157 (1) of the TFEU provides that all members are under a duty to ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied. In this context, the word pay includes basic or minimum wage or salary and any other consideration in cash or in kind. The word workers and the word pay are both interpreted by the European Court of Justice in broad terms (Burri & Prechal, 2014).

Practice

In practice, the decisions of the European Court of Justice and domestic courts are both relevant to understanding how the law has been applied by these courts. Due to the primacy of the European Union law over the UK, much of the practice now evolved from the approaches developed by the Court of Justice. This is clear from a case in which a woman employee made a claim for equal pay under Article 157 (1) on the ground that her male predecessor was paid more than her for the same value of work (Macarthys Ltd v Smith, 1980). In the UK, the Equal Pay Act 1970 was applicable but the Court of Justice held the matter applicable under Article 157 (1) and not under the Equal Pay Act 1970 and directed the British court to dis-apply the national law and apply Article 157 (1) in this case (Chalmers, et al., 2014, p. 579). Therefore, in order to understand the practice as applicable today, the jurisprudence developed by the Court of Justice becomes relevant.

As mentioned in the previous section, the words worker and pay has been interpreted broadly by the European Court of Justice. For instance, worker has been defined as “a person who, for a certain period of time, performs services for and under the direction of another person in return for which he or she receives remuneration” (Deborah Lawrie-Blum v Land Baden-Württemberg, 1986, p. para 17). The case of Defrenne, the Court of Justice defined pay in a restricted sense (Defrenne v Sabena (No 2) (1976) Case 43/75, 1976), but broadened the categories in the latter cases (Foster, 2012). For instance, in Eileen the Court of Justice held that even travel facilities are included in the term pay (Eileen Garland v British Rail Engineering Limited [1982] ECR 359, 1982). In other cases, pay has been interpreted to mean overtime supplements (Ursula Voß v Land Berlin , 2007), and bonuses (Susanne Lewen v Lothar Denda, 1999).

A 2009 report of the European Commission Employment pointed out that the average pay gap across the European Union is very high with women across Europe earning on average 17.4% less than men; in some countries the gender pay gap has been found to be widening (European Commission Employment, 2009, p. 5). In the UK specifically, one of the reasons for gender pay gap remains the increasing employment of women in the part time jobs, with full time jobs having more proportion of men (European Commission Employment, 2009). Research also indicates that women in the UK lose nine percent of their wages after the child and sixteen percent after the second kid (O’Reilly & Smith, 2015). These figures indicate that there is still a significant pay gap in the UK firms.

Conclusion

There is still some way to go for us to achieve gender justice at workplace because empirical data indicates that despite there being an application of laws, both British and European, for the enforcement of pay parity in the UK, there is still significant pay gap in UK firms. This means that there is scope for development and evolving of the law and practice of firms.

References

• Agocs, C., 2002. Canada’s employment equity legislation and policy, 1987-2000: The gap between policy and practice. International Journal of Manpower, 23(3), pp. 256-276.
• Burri, S. & Prechal, S., 2014. EU Gender Equality Law: Update 2013, European Network Of Legal Experts In The Field Of Gender Equality.
• Chalmers, D., Davies, G. & Monti, G., 2014. European Union Law: Text and Materials. Cambridge: Cambridge University Press.
• Deborah Lawrie-Blum v Land Baden-Württemberg ( 1986).
• Defrenne v Sabena (No 2) (1976) Case 43/75 (1976).
• Eileen Garland v British Rail Engineering Limited [1982] ECR 359 (1982).
• European Commission Employment, S. A. a. E. O., 2009. Opinion on The effectiveness of the current legal framework on equal pay for equal work of work of equal value in tackling the gender pay gap, s.l.: European Commission Employment.
• Foster, N., 2012. EU Law Directions. Oxford: Oxford University Press.
• Hepple, B., 2010. The New Single Equality Act in Britain. The Equal Rights Review, Volume 5, p. 11.
• IDS, 2008. Equal Pay: Employment Law Handbook. London:Sweet & Maxwell.
• Krahn, H., Lowe, G. & Hughes, K., 2007. Achieving Workplace Equality. In: Workplace, Industry and Canadian Society. Toronto: Thomson-Nelson, pp. 205-212.
• Macarthys Ltd v Smith (1980).
• McColgan, 2011. Equality Act 2010, London: Institute of Employment Rights.
• O’Reilly, J. & Smith, M. D. S. a. B. B., 2015. Equal pay as a moving target: International perspectives on forty-years of addressing the gender pay gap. Cambridge Journal of Economics, 39(2), p. 299.
• Ursula Voß v Land Berlin (2007).
• Susanne Lewen v Lothar Denda (1999).