Bonus points in Birmingham
Friday, April 30th, 2010
Life can be a funny thing. The last three weeks have been full of discussions about saving billions of pounds in the UK economy. The public sector are being warned that they have to cut back between 15-25%, so we all know that we’re in for some savage belt-tightening. At the same time, the decision of a Birmingham Tribunal this week means that Birmingham City Council could be facing between a £200 - £500 million bill in back-dated pay and bonuses after female staff won a class action on equal pay. Although the final bill is yet to be confirmed, legal experts estimated it could equate to as much as £100,000 per worker or more, as equal pay awards can be back-dated for six years plus interest.
In one of the biggest discrimination claims ever made, around 5,000 female workers brought a class action against the Council after they were not paid bonuses that were offered to male grave diggers and refuse collectors. The bonuses allowed the men to earn more than £50,000 a year. The tribunal found that Birmingham City Council had excluded female workers from a bonus scheme that, in some cases, was worth up to 160% of a male worker’s basic pay package.
The Council said the gender pay inequality had arisen as a result of an old pay structure, which had previously rewarded male workers such as refuse collectors and grave diggers. An equal pay audit, which the Council was legally required to carry out in 2007, sought to address the balance in salaries and bonus awards – though that led to strike action by staff as some male employees saw their pay cut.
These kinds of awards create financial difficulties for councils and other employers, but it is no more than the women are actually owed. Recipients of equal pay awards are entitled to claim for up to six years of back pay.
The Birmingham case highlights that equal pay applies to other elements of the employment contract as well as salaries. If an employer pays their male and female employees the same basic rates for jobs of a similar nature, but if it then goes on to reward bonus payments to its male workers only, or if it’s only the more male-dominated jobs that attract overtime payments, then under the Equal Pay Act, that constitutes discrimination and the employer is liable to be faced with a legal challenge at some point down the line.
At Russell HR Consulting, we recommend that prevention is better than cure. If you’re considering carrying out a pay audit, get in touch. We can also help with employment law training and general HR support. For further details, please don’t hesitate to contact a member of our team on 0845 644 8955. Alternatively, you can visit our website at http://www.russellhrconsulting.co.uk/
