Equal pay audits: the wrong tool in the box?

Once upon a time, a long, long time ago, a newly-elected Prime Minister claimed to have invented a wondrous thing: joined-up government. From now on, the purer-than-pure premier said, ministers and their departments would work together to ensure both that an initiative in one policy area would not have unwanted consequences in another, and that only the best and most effective policy tools were selected and prioritised to tackle any particular policy problem. But the years passed, a number of wars were launched, and Tony Blair gradually lost his enthusiasm for joined-up policy making.

This was unfortunate, as ‘joined-up government’ was undoubtedly one of Blair’s better ideas. For decades if not centuries, far too much government policy has been made in silos, with ministers in one department giving little if any thought to how policy ‘owned’ by other departments (or even just by other ministers in the same department) might be reformed or developed to help them achieve their own policy objectives. And, frankly, much the same can be said of many of the campaigning and lobby groups that seek to influence government policy.

This fundamental flaw in the policy process came to mind in recent weeks, with a set-piece speech on the gender pay gap by Gloria De Piero MP, Labour’s shadow minister for women and equalities, and a survey report on the gender pay gap among senior managers by the Chartered Management Institute and XpertHR, setting off a wave of outraged comment pieces and renewed calls for the introduction of mandatory equal pay audits for large employers (i.e. of the sort promised by Ms De Piero).

In the Guardian, noting that, at the current rate of change, it will take 60 years to close the current gender pay gap of 19.7 per cent, columnist Lauren Laverne posed the question: “we have to wait a hundred years for the 1970 Equal Pay Act to work? Are you on glue?” Meanwhile, over on the paper’s Women in Leadership pages, the first of Harriet Minter’s five proposals “to end the gender pay gap” was: “make reporting on pay data mandatory”. According to Minter, this would “bring an end to the madness” of “women being paid less than men”, and “guarantee a fair and equal wage for all”. And, noting the CMI/XpertHR finding that male company directors take home £21,000 more each year than their female counterparts, the Work Foundation’s Professor Stephen Bevan found it “hard to resist the conclusion that equal pay audits should now become mandatory”.

Hmmm. The problem with that line of argument is that it assumes – or, at least, conveys the message – that (a) the gender pay gap is all about women being paid less than men to do the same job; and (b) this is all due to wicked employers having gender discriminatory rates of pay. Accordingly – or so the argument runs – all you have do to close the gender pay gap is shame all those wicked employers into paying their staff equally by making them conduct and publish equal pay audits.

In reality, it’s a lot more complicated than that. Discriminatory pay by employers is just one of many factors behind the gender pay gap, and is quite possibly one of the least influential, overall (which is no consolation if you are one of the all too many women subject to such discrimination). As Professor Bevan notes, “a range of factors are frequently shown to have strong explanatory power, including occupational segregation (and a lower societal value placed on so-called ‘women’s work’), [and] the impact of part-time working both on pay itself and the life-time accumulation of ‘human capital”, as well as “both direct and indirect discrimination”. In 2012, research commissioned by the Government Equalities Office could find only 13 successful ‘equal pay’ employment tribunal claims against employers other than the NHS and local authorities in the three-year period 2009-11, and only 41 such claims between 2004 and 2011.

Furthermore, most if not all of those calling for mandatory equal pay audits are in fact proposing only that they be mandatory for large employers – that is, those with more than 250 employees. Yet such companies employ less than 10 million (40 per cent) of the national workforce of some 24.3 million. So equal pay audits wouldn’t bring any benefit to 60 per cent of the workforce.

Accordingly, as supportive as I am of gender equality and of tackling sex discrimination in the workplace, it’s never been entirely clear to me how or why mandatory equal pay audits would effectively address such a complex range of factors. Furthermore, even if such pay audits did eliminate gender discriminatory pay rates, a gender pay gap would still remain, due to the influence of other, arguably more powerful factors – not least the significant impact on women’s earnings of taking time out of the labour market to have and care for children.

As FlipChartRick demonstrates this week in a must-read blog post, the gender pay gap is not spread evenly among women of all ages and all pay brackets. Far from it. Citing analysis by David Richter of Octopus HR, FlipChartRick argues that “the full-time pay gap at the median has almost disappeared for those in their twenties, with women earning slightly more than men [on average] in recent years”. And “there has been a significant fall in the gender pay gap for those in their thirties”.

Moreover, while “the pay differential for those in their twenties is fairly narrow, even at the very top level [of pay], the pay gap for those over 40 is significant at all levels of the pay distribution but much higher at the top”. In short, “age and position in the earnings distribution has a significant effect on the gender pay gap. Women over 40 and/or in the upper income bracket earn significantly less”. That is, “the gender pay gap appears just at the point in the age distribution when many women have children” and “children have more of an impact on women’s pay than men’s” because it is women “who take on most of the childcare responsibilities”.

FlipChartRick concludes that introducing mandatory equal pay audits “might yield some interesting information for pay data geeks to pore over, but I doubt that it [would] tell us much that we don’t already know, or even whether it [would] reveal some major employers to be significantly worse than others. It is unlikely that the gender pay gap will disappear until equal proportions of women and men take equal responsibility for childcare”.

Which brings me back to my point about joined-up government policy-making. In recent weeks, as part of her “mission to promote shared parental leave”, a policy reform intended to make the proportions of women and men taking responsibility for childcare more equal, the BIS minister Jo Swinson has given a number of major media interviews – including in the Independent, the Evening Standard, and with Family Networks Scotland.

However, while Ms Swinson used these interviews to make much of “recognising that dads want to have a bigger role in their child’s life from the first days” and boosting parental choice, she signally failed even to mention the gender pay gap and the central role that shared parental leave (and more shared parenting) might play in closing it. And the Minister’s omission is even more surprising when one considers that, in the middle of her media push on shared parental leave, she also launched the Liberal Democrats’ campaign to “deliver equal pay in the workplace”. Which consists entirely of – you guessed it! – “plans to require large companies [i.e. those with over 250 employees] to publish the difference in pay between male and female workers”.

Of course, the nine months before a General Election is not the best time to find joined-up thinking within a government made up of two competing political parties, or even just within each political party. But perhaps after May 2015 both elected politicians and the relevant campaign and lobby groups will pay greater attention to the (rather obvious) link between the gender pay gap and the need for more shared parenting. And then we might just see progress on policies – such as increasing the shockingly low rate of statutory maternity and parental leave pay – that would help close the former while facilitating the latter.

Ministry spinning out of control on ET fees

While last month’s anniversary of the introduction of employment tribunal fees passed without the comment we might reasonably have expected from shadow ministers such as Sadiq Khan and Chuka Umunna, two articles in the Daily Mail and Sunday Express kept the #ukemplaw community busy debating which of the two is the worst thing ever written about the origin and impact of the fees regime.

Both articles are indeed wondrously dreadful, but their greater significance lies in what they tell us about the spin we can expect from the Ministry of Justice in the coming weeks, as it completes and announces the conclusions of its long-planned Post-Implementation Review (PIR) of the fees regime.

In the Daily Fail – under the headline “Hallelujah! The gravy train’s derailed: as workers are made to pay £1,200 fee, discrimination cases plunge by 75%” – Steve Doughty trilled that “the multi-billion pound industry built on vexatious discrimination claims against employers has virtually collapsed … with sex discrimination claims down 80% and race claims by 60%”. And “the spectacular decline follows a simple reform introduced by Justice Secretary Chris Grayling last summer – the charging of fees to workers who want to make a claim against their employer”.

Don’t you just love that ‘simple’, and the implication that only someone with the intellect of Chris Grayling could have come up with such a straightforward policy solution? Presumably, Doughty was still at journalism school in 2011, when the fees regime was in fact dreamt up by Grayling’s predecessor as Justice Secretary: the now much-lamented (by some) Kenneth Clarke.

“In the first six months of the new fees system”, Doughty continued, “the number of claims dropped from 109,425 to 20,678. The fall is a major boost for businesses, which were previously spending around £1.6 billion a year in defence costs. There were 191,000 employment claims in the financial year to March 2013”. And the article ended with two photos of unsuccessful ET claimant Stella English, who just happens to be female and blonde.

Meanwhile – under the headline “An end to abuse of the employment tribunal system” – Leo McKinstry informed readers of the Sunday Express that “a gigantic racket fuelled by whingeing trade unions, parasitical lawyers and money-grabbing litigants” has been “dramatically transformed by a reform introduced by Justice Secretary Chris Grayling, in a move distinguished by its simplicity”. Ah yes, the simplicity.

“At a stroke”, McKinstry continued, “the compensation gravy train has been sent into the buffers. Before Grayling’s reform, the flood of employment litigation was unceasing. In 1998, there were 80,000 [ET] cases, an annual total that had risen to over 200,000 in recent years. Yet in the first six months since fees were imposed the number of cases plummeted to 20,678, compared to 109,425 in the previous two quarters”. And, naturally, the article included a nice big photo of the female and blonde Stella English.

These stunning examples of journalistic garbage would be best ignored and quickly forgotten, were it not for their remarkably similar wording, their use of identically precise figures for the number of claims in six-month periods before and after the introduction of fees (109,425 and 20,678) that I cannot match up with any of the figures set out in the Ministry’s most recent statistical bulletin (see endnote), and their misplaced crediting of Chris Grayling.[i]

To my mind, these curious coincidences suggest the articles were based on private briefing by none other than Chris Grayling (or a junior minister, special adviser, or press officer acting on his behalf). And, if I am right, that in turn betrays a 180° change of direction in the Ministry’s spin on fees.

In March this year, when the Ministry’s quarterly tribunal statistics revealed a 79% fall in ET claims in the period October to December 2013, compared to the same quarter in 2012, ministers spun the line that this cliff-shaped decline was in fact no more than the anticipated continuation of a “longer term downward trend” in the number of claims. In other words, the introduction of fees had had little if any impact on the number of claims.

But with the next set of quarterly tribunal statistics, released in June, confirming a similar evisceration of ET claims of all types and jurisdictions in the period January to March 2014, and the Ministry’s patently bogus line being easily blown apart by a few simple charts, ministers appear to have changed tack.

In short, the Ministry’s original line of ‘nothing to see here, move along please’ has given way to a story in which clever Chris Grayling has saved the nation from an ‘unceasing flood’ of (vexatious) ET claims with a ‘simple’ but highly effective reform. And I imagine we are going to hear much more about Grayling’s heroics over the coming weeks. So it is worth taking a few moments to note the flaws in the Ministry’s new spin, which is no more credible than its old spin.

Firstly, there have never been “over 200,000” ET cases a year, as McKinstry suggests in the Sunday Express. Nor were there 191,000 cases in the financial year to March 2013. There were some 191,000 claims in 2012-13, but that headline figure includes all the claimants in the relatively small number of multiple claimant cases, each of which is brought (on the same grounds) against one employer. And, if the concern is the overall impact of ET claims on businesses, then it is the total number of cases (single claims/cases and multiple claimant cases) that is most meaningful, since that is also the number of employers affected.

In 2012-13, for example, the headline total of 191,541 claims consisted of 54,704 single claims/cases brought against 54,704 employers (or slightly fewer than that, in fact, as some claims would have been against the same employer), and a total of 136,837 multiple claimants in just 6,104 multiple claimant cases brought against 6,104 employers. Furthermore, many – perhaps most – of those 6,104 multiple claimant cases were equal pay claims brought by trade unions and law firms against local authorities and other public sector bodies. So they didn’t impose any burden at all on ‘businesses’.

So Doughty’s “£1.6 billion a year in defence costs” for businesses in 2012-13 – which he calculates by multiplying his (or Chris Grayling’s) average cost per claim figure of £8,500 by 191,000 – was more like £0.5 billion (£8,500 x 60,808 cases) spread across just 60,808 employers in both the private and the public sector.

Secondly, the number of ET cases was not an ‘unceasing flood’ until Grayling’s heroics in July 2013. On the contrary, there was a long(ish)-term downward trend in the number of cases, and especially the number of single claims/cases – though that trend does not explain the sudden drop-off since the introduction of fees. Indeed, as the following chart shows, not only had there had been a steady decline in the number of cases since a recession-induced peak in 2009-10, but by the first quarter of 2013-14 (i.e. April to June 2013) the rate of new cases was at its lowest level for more than a decade. So, hardly a situation requiring heroic (and drastic) ministerial action.

Chart 1: Single claims & multiple claimant cases, 2000-01 to 2013-14*


Source: Ministry of Justice. *The figure for 2013-14 is a projection based on Quarter 1 (April to June 2013) only.

Now, it is true that, in the late-2000s, the average number of claimants involved in each multiple claimant case increased significantly, largely due to trade unions and law firms trawling for claimants to join equal pay claims brought against local authorities and other public sector bodies. So the headline, total number of claims grew accordingly. But the number of such multiple claimant cases (the red area in Chart 1, above), and therefore the number of employers affected, remained relatively small. But in any case, as the following chart shows, since peaking in 2009-10 even the number of multiple claimants has been in decline.

Chart 2: Multiple claimants, 2000-01 to 2013-14*


Source: Ministry of Justice. *The figure for 2013-14 is a projection based on Quarter 1 (April to June 2013) only.

The third – and perhaps most significant – flaw in the Ministry’s new spin, of course, is the assumption that every single one of the tens of thousands of claims lost to fees since July 2013 was a ‘vexatious’ claim. That is not an assertion that is susceptible to proof (or disproof) by chart – you are either stupid and/or gullible enough to accept it, or you are reasonably intelligent and know that it is wholly implausible. Prior to the introduction of fees, not even the wackiest of the employer lobby groups ever suggested that 80% of all ET claims were vexatious.

The real test of Grayling’s new spin will be not whether he can feed willing journalists at the Daily Mail and Sunday Express – any idiot can do that – but whether he can bamboozle Parliament on this point when he announces the conclusions of the Ministry’s Post-Implementation Review.

Time will tell. But at least now it is common ground that the ET fees regime has had a dramatic impact on the number of claims/cases. In these grim days of evidence-free, ideological policy-making, that has to count as progress.


[i]             According to Table C.1 of the quarterly tribunal statistics published by the Ministry of Justice in June 2014, there were 21,809 ET claims (singles and multiples) in the six-month period October 2013 to March 2014; 32,292 such claims in the period September 2013 to February 2014; and 36,399 such claims in the period August 2013 to January 2014. Similarly, there were 102,066 such claims in the six-month period February to July 2013; 108,049 such claims in the period January to June 2013; and 94,937 such claims in the period December 2012 to May 2013.

Beware of Douceurs

On the 30th July, the Unison website carried news of a successful tribunal claim against Bromley Council under the headline

“Tribunal orders council to compensate workers offered cash to sign away rights”.  

This got my interest.  I read on.

“Bromley Council has been ordered to pay more than £64,000 in compensation to 18 of its staff after an employment tribunal had offered cash incentives to sign new contracts that took them out of existing collective bargaining agreements.”

A frisson of deja vu.  Were these not the exact same facts as in Wilson & Palmer & others v Associated Newspapers & Associated British Ports, a case with which I was very familiar.  This had led to the European Court of Human Rights case of Wilson and Palmer and others v UK [2002] IRLR 568.  That in turn had led the then Labour government to pass a series of amendments to the Trade Union and Labour Relations (Consolidation) Act 1992 including section 145B which provides;-

Inducements relating to collective bargaining

(1) A worker who is a member of an independent trade union which is recognised, or seeking to be recognised, by his employer has the right not to have an offer made to him by his employer if—

(a) acceptance of the offer, together with other workers’ acceptance of offers which the employer also makes to them, would have the prohibited result, and

(b) the employer’s sole or main purpose in making the offers is to achieve that result…

Unison kindly put a link to the decision at the end of the report. It is here:-


It makes very interesting reading.  Bromley made a series of concessions so the only issue for the tribunal was whether their sole or main purpose in making the offers was to achieve the prohibited result.  The prohibited result is defined thus:-

(2) The prohibited result is that the workers’ terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union…

The tribunal had little difficulty in finding that Bromley’s purpose was prohibited as their own documentation and witness evidence confirmed that they intended to do away with the existing collective bargaining of terms of employment and to achieve this workers had to be induced to sign new contracts of employment where pay was not determined by collective bargaining.

Paragraph 54 of the decision is very revealing.

The Tribunal was surprised that neither the officers of the London Borough of Bromley, nor the officers of the unions involved, were aware of the provisions of section 145B of the Act during the course of the events described above.  Both parties may well have conducted themselves very differently had they been aware of these provisions…”

There is still a debate to be had as to the width of the term “purpose” in Section 145B.  On 7th March Eversheds published a briefing about Section 145B of the 1992 Act and a tribunal case in which they successfully acted called Wyer v Pembrokeshire County Council.    It is referred to in the Unison case.  http://www.eversheds.com/global/en/what/articles/index.page?ArticleID=en/Education/Education_HR_e-briefing_572_Do_trade_unions_have_a_monopoly_position

They boast that the Council was able to adduce detailed witness and documentary evidence to persuade a tribunal to take a broader view of the Council’s “purpose” in seeking to implement a new pay and grading structure outside the collective bargaining process.  However they caution that on similar facts another tribunal  in a case called Whitaker v Buckinghamshire County Council, accepted the trade union submission that you take a narrow view of the “purpose” and once the employer seeks individual worker’s agreement to changes to terms and conditions outwith the collective agreement, then Section 145B engages.

In Unison case, Bromley had the additional hurdle of offering to workers a financial incentive (or “Douceur” as the Court of Appeal referred to them in the Wilson & Palmer case) to sign the new contract giving up the right to have their terms of employment determined by collective bargaining.

With the Government encouraging the breakup of national collective bargaining arrangements and the recent changes to TUPE referred to in a previous article on Hard Labour by Jim Wright


we can expect a lot more discussion about the intricacies of section 145B and the other provisions introduced following the ECtHR decision in Wilson & Palmer.