Equal Pay and Flexible Working Bill [HL]

My Lords, we believe that the Bill will be published in the spring. When further details became available, I shall write to the noble Lord. We are carefully considering how the law on equal pay will be framed in the new legislation. This will include the grounds on which differences in pay for equal work can be justified, a subject also addressed by the noble Baroness’s Bill. Under existing law, for a difference in pay between a man and a woman doing the same work or work of equal value to be justifiable, the employer must be able to point to a genuine material factor that is unrelated to gender. As has been said, London weighting is such a material factor, and must be both significant and related to the difference between the contractual terms of the female and the male comparator. The employer therefore has to show that this is the reason for the disparity in pay. I therefore wholeheartedly agree with the three reasons sharply articulated by the noble Lord, Lord Lester, as to why adding a reasonableness element to this test would not be helpful. It would potentially require an employer to be ready to objectively justify as reasonable any reason for a difference in pay between a man and a woman doing equal work even where the reason for it is not discriminatory, whereas at the moment it is only necessary to do so where the fact in question is tainted by indirect discrimination. This could increase the number of potential claims and the burdens on business, and could lead to extra, unnecessary complexity without adding to the protection provided to women. In our Bill, we intend to clarify the way in which the current law works. I cannot better the compelling arguments made by my noble friends Lady Gould and Lady Prosser, based on their lifetime experience in this area, about the unintended consequences in relation to this and the second element in the Bill which requires that when there is a breach of an equal pay requirement an employment tribunal should be required to order an equal pay audit. Under this proposal employers would be required to carry out an equal pay audit even if they have recently undertaken one or if the case does not have implications for the majority of employees in the organisation. The impact of this proposal would therefore be disproportionate in most cases. A study carried out for the Equal Opportunities Commission in 2005 found that a typical audit in the private sector cost the equivalent of three to six-months’ of a full-time member’s staff time. Nor would it have a significant impact on the gender pay gap. It would have applied to only 125 equal pay cases in 2006-07, the latest year for which figures are available. This equates to only 2 per cent of the total number of equal pay cases in that period. In preparing our equality Bill, the Government have carefully considered the case for all employers to carry out mandatory equal pay audits. We have concluded that while equal pay audits can be useful as a way of exploring unfair pay practices in some circumstances, they can also be expensive, time-consuming and burdensome. The purpose of the Government’s equality Bill is therefore focused on preventing discrimination and closing the gender pay gap, not just closing the stable door after the horse has bolted. I agree with the insightful analysis of my noble friend Lady Morgan that not all elements of this problem can be legislated for. The Government’s equality Bill will therefore increase transparency by banning secrecy clauses that prevent people discussing their own pay; by ensuring that public bodies report on equality issues, which will enable targeted and effective action; and by extending the scope for positive action, which will give employers a chance to make their workforce more diverse when choosing between two equally suitable candidates. Our Bill will strengthen the law in a way that will have a real impact on the gender pay gap without imposing unnecessary burdens on business. We therefore look forward to the support for the Bill of the noble Lord, Lord Hunt, in the light of the comments he has made.