The answers to this question will change on 1st October 2010 when the Equality Act begins to come into force. The purpose of this Act is largely to consolidate existing discrimination law, bringing it in effect all into one Act, and therefore could be easily overlooked. However there are some new features that could have a significant impact on your business operations. This note deals with the first of three of these new features.
Discussing pay, and victimisation
As a result of the new legislation clauses which restrict an employee or worker from disclosing information about their pay or seeking information about pay levels from other employees or workers will be very difficult to enforce. Currently discussions of this nature can be prohibited and relied upon in disciplinary hearings. Some employers feel that pay rates are personal to individuals and do not want open disclosure, and indeed some employees no doubt feel the same way, although workers who have a different relationship may not feel that a similar level of trust exists.
However from October this kind of restriction will be unenforceable where the discussion or disclosure is requested or made for the purpose of establishing whether there has been any discrimination with regard to pay.
As the discussion or disclosure has to only be for this purpose it is an excuse which could quite easily be justified in many cases. In addition taking action against an employee or worker because they have sought or disclosed such information could in itself be victimisation as they could be being treated less favourably because they disclosed or requested such information. Victimisation is a head of claim under discrimination law.
In terms of workers it can be seen that this piece of legislation links up with the Agency Workers Regulations 2010, as workers will be entitled to same pay terms after October 2011. Generally, many may reel against the provisions as they could interfere with the essential trust between an employer and an employee in negotiating personal salary and other pay rates. Having to justify to one employee why another doing similar work is on a higher rate will be uncomfortable and could be perceived as an infringement of the confidentiality that exists between the employer and employees. It also could lead to the lower paid employee feeling aggrieved, albeit that the employer’s reasons are entirely justifiable, and thus upset the trust. How an employer is meant to explain this to an employment tribunal without an adverse effect on the employment will be the question. However we live in times where transparency is the by word and many may feel that common sense will prevail in due course with a repeal of this provision.
For now if your current policy is to include restriction clauses of this kind in your contracts there is no reason why you should not retain them, to act as a deterrent. However they will be unenforceable and therefore could not be relied upon to demonstrate a breach of contract in any disciplinary action if the employee asking or providing the information is doing so to establish that there has been or is no discrimination.
Finally it is worth bearing in mind that there is no law that requires one employee to be paid the same as another doing the same job. The only law that applies is gender, part time and fixed term contract discrimination, and from October 2011 in relation to workers of course the Agency Workers Regulations. Ironically agency workers will end up with more protection than regular employees!
For more information on this subject or any aspect of the Equality Act please contact Theresa Mimnagh on 01273 236236.
Adrian, a highly experienced lawyer, founded Lawspeed in 1997. He is responsible for developing our extensive portfolio of products and services, including the widely used Lawspeed contract templates. Adrian is an expert on “recruitment law” and specialises in contracts, regulatory compliance, employment status and dispute handling. He is chair of the trade body the Association of Recruitment Consultancies, the only lawyer lead recruitment trade body in the UK. Adrian and his co-director Ravi devised Standards in Recruitment as a vehicle for helping drive up standards and compliance in the industry.
Adrian is our lead in discussions with the government over regulatory evolution. Apart from assisting with client support, Adrian’s primary role is research and development into methods of business delivery, our latest service Proterms being his most recent project. Adrian heads our IR35 lawyers team.