The Lifeline Project was a well-regarded charity. Failure to carry out the targets within the contracts led the charity into insolvency and resulted in a personal, 7-year disqualification order.
The decision in their favour set a precedent and extended the time period that an employee can bring a claim for equal pay compensation from six months to six years.
The women, who worked for the Council as cooks, cleaners and care staff, had previously been denied bonuses worth up to 160% of their basic salaries, which had been given to male staff who did work rated as equivalent to theirs. Birmingham City Council had already paid tens of thousands of pounds in compensation to ex-employees in 2007, and currently has an estimated 20,000 claims still awaiting an outcome.
The ruling is the biggest change in Equal Pay law since it was introduced in 1970, and is likely to affect many more Councils across the country. The potential liability for local authorities could be significant - it is estimated that the 174 claimants in the recent case against Birmingham are entitled to around £2 million in compensation. Faced with this potential pay-out, it would be prudent for other authorities to consider whether they too are vulnerable to further equal pay claims in light of this decision and if so, to budget accordingly.
With the ruling extending the time limit to make a claim against an employer from six months to six years, ex-employees who left the organisation long ago could start to bring claims. In addition, Unions that have previously advised members not to bring claims against ex-employers due to time restraints may now advise to the contrary, particularly since if they fail to do so they may be at risk of negligence claims.
It is of course essential that local authorities have robust job evaluation processes in place for all posts. The BBC have reported that at the time that these women were working for Birmingham City Council, the annual salary of a female manual grade 2 worker was £11,127, while the equivalent male salary was £30,599, plus an additional bonus of up to £15,000 per year. Nowadays, such blatant pay discrimination is unlikely following the implementation of Single Status. This saw the implementation of a new payment structure and introduced a pay grade system to define jobs of equivalent standard in order to ensure equal pay. Even though job evaluation will have eradicated many past inequalities, it would still be wise for local authorities to conduct a thorough investigation into their own payroll to ensure that any remaining hidden pay inequalities, perhaps from pay practices that have developed over time within particular directorates or teams, however minor, are rectified.
What is key about the recent ruling is that the extension of the time limit for claims may mean that authorities that have made every effort to improve their pay processes in the last few years could still be held accountable for past inequalities they thought had been resolved. The impact is such that many local authorities that thought they had "closed the book" on past claims, could now find that claims are issued against them in the Civil Courts. The cases against Birmingham City Council relate to employees who left the Council between 2004 and 2008.
The fear of being forced to enter into costly court proceedings comes at a difficult time given the considerable financial pressure that local authorities are under to cut costs across their services. An unsuccessful party in the Civil Courts is likely to be liable for the opponent’s legal costs as well as their own. Therefore, the risk for local authorities in defending claims is heightened where there is a chance that they may lose. To avoid additional costs, it may be wise to try to agree early out of court settlements with claimants where there is a known risk of the claims succeeding.
Whilst the situation is not ideal for local authorities, what is important is that they use this as an incentive to review their equal pay risks, take advice from legal experts and be prepared to respond appropriately should claims arise.
Matthew Wort and Chris Plumley are both Partners at Anthony Collins Solicitors.
On 23 July, trainees from Anthony Collins Solicitors will host an ‘experience day’, which will involve various activities and presentations, with lawyers and non-lawyers from across the firm.
The Office of the Immigration Services Commissioner (OISC) has launched a new scheme specifically for charities and not-for-profit organisations who want to advise EU citizens on UK settlement.
In the second part of our series on contract management pitfalls, we look at the risks and opportunities presented by payment mechanisms in construction contracts.
Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
The UK Government has been consulting on how it should promote social value in its procurements. Here is our response that we submitted to the consultation...
The Tenant Fees Act 2019 came into force on 1 June 2019.
A recent case in the Court of Appeal will no doubt bring a sigh of relief for employers, but a corresponding sigh of disappointment may be uttered for equality and gender balance in the workplace.
This briefing assists response to the consultation paper by outlining the consultation questions, providing some background information and prompting some thoughts and potential answers.
A report published on 29 May by the Institute for Fiscal Studies (IFS) has found that since 2009-10, local government spending on services has fallen on average by 21% in real terms.
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