Navigating equal pay claims: a legal guide for employers

Equal pay litigation poses one of the biggest financial and reputational risks facing UK employers today. Current large-scale tribunal claims and multi-million pound liability or settlements in both the public and private sectors show that historic pay practices and modernised workforce models can combine to create systemic vulnerabilities.

What is the legal framework?

Key legislation

The Equality Act 2010 gives the right to equal pay for men and women doing like work, work of equal value or where their roles have been rated as equivalent under a Job Evaluation Scheme. The equal value route enables comparisons to be made between men and women who are carrying out very different roles. The test is whether the two jobs are equal “in terms of the demands made” on the claimant and their comparator by reference to factors such as effort, skill and decision-making. Employers who pay different rates must show the difference is due to a material (non-sex-related) factor.

Comparators

Claimants must identify a real-life comparator (someone of the opposite sex with whom they can compare terms and pay). The comparator must be an employee working at either the same establishment, a different establishment but with common terms, or employed by a single body responsible for setting or continuing their terms of employment. The Supreme Court recently confirmed in Asda Stores Ltd v Brierley (2021) that retail staff can, in principle, compare themselves with depot staff where the statutory conditions (including “common terms” in some cases) are met. Comparators working for associated employers can also be used as comparators. This is particularly relevant in the public sector, where service delivery has been outsourced to Local Authority Trading Companies.

Burden of proof

In an equal pay case, the burden of proof shifts between the parties as follows:

• The burden starts with the employee who has to establish that they are employed on like work, work of equal value or work rated as equivalent to that of their comparator. This gives rise to a rebuttable presumption of sex discrimination.
• The burden then shifts to the employer who has to prove that the difference is caused by a material factor other than sex, for example, different collective bargaining arrangements or market forces (in other words, that there is no direct discrimination).
• The burden then shifts back to the employee to show that the material factor is tainted by indirect sex discrimination. This can be done either by establishing that the pay disparity results from a “provision, criterion or practice” (PCP) that puts one sex at a particular disadvantage. Or where there is no PCP, by relying on statistical (or possibly other) evidence of disadvantage, e.g. a claimant job group which is occupied predominantly by female employees and a comparator job group which is occupied predominantly by male employees.
• If the employee establishes that the factor is sex-tainted, the employer has to show that that it is objectively justified, in other words it is a proportionate means of achieving a legitimate aim.

Time limits and remedies

An equal-pay claim to an Employment Tribunal generally requires early conciliation and must normally be presented within six months (less one day) of the claim’s relevant date, however, claimants may pursue breach of contract claims for equal pay in the civil courts up to 6 years after the claim’s relevant date.

Compensation

Damages awarded can be significant as they can include back pay, i.e. the difference in pay between the claimant and comparator for a maximum period of 6 years from the date of claim and forward until the pay is equalised and interest.

Compulsory Equal Pay Audits

In addition to awarding compensation, tribunals are required to order employers who have been found in breach of equal pay law to carry out equal pay audits in certain circumstances. Such an audit involves the publication of relevant gender pay information. It must identify any differences in pay between men and women and the reasons for those differences; include the reasons for any potential equal pay breach identified by the audit; and set out the employer’s plan to avoid breaches occurring or continuing.

Why are employers seeing mass claims now?

Several structural and legal factors have combined to make mass equal-pay litigation more likely:

Workforce segmentation

Retailers, councils and large service organisations often have a split between frontline roles (predominantly female) and operational/technical roles (predominantly male) — fertile ground for “work of equal value” comparisons. Recent tribunals have focused on this precise dynamic.

Historical pay decisions and legacy grading

Historic bargaining decisions, legacy pay settlements and inconsistent job evaluation across departments create statistical disparities that can be relied on by claimants.

Collective litigation models and unions

Unions and specialist claimant firms are bringing multi-claimant actions (sometimes tens of thousands of claimants), amplifying financial exposure and press coverage.

What are the key risk areas for employers?

• No equal-pay audit, an out-of-date job evaluation, or a job evaluation applied inconsistently.
• The lack of a current, robust, gender-neutral job evaluation.
• Poor record keeping with little documentation about how pay decisions were made and the relevant consideration (e.g. Market evidence, benchmarking, job evaluation and scoring methodology, and collective bargaining offers). This undermines any material-factor defence.
• Underestimating collective exposure – the lead claimant wins may open the door to cohort claims; financial modelling must account not only for those who have brought claims, but the potential claimants waiting in the wings – the “floodgate” claimants. This can include both female and male claimants. Male claimants can bring what is known as a “piggy back claim” by comparing themselves to a female claimant who has succeed in her equal pay claim and had their pay adjusted as a result.

Practical checklist: what steps can employers take?

Immediate (0–3 months)

• Commission a formal equal-pay audit comparing pay and grading across comparable groups to include gender-segregation analysis. If you already have one, validate its methods against current tribunal practice. Be aware that if such an audit is carried out openly and its findings highlight historic inequality, this could result in equal pay claims. To minimise the risk of such an audit being used as evidence of historic inequality, you could instruct solicitors to carry out such an audit to identify any legal risks and thereby seek to rely on legal privilege in the findings and advice provided.
• Preserve and collect documents: job descriptions, scoring/job-evaluation materials, market data, recruitment paperwork, pay-setting minutes and any correspondence about historic pay decisions.
• Check insurance (if any) and legal costs budgets; involve finance early.
• Be aware that a robust analytical Job Evaluation Scheme provides a shield against many equal pay claims, as claims cannot be brought by claimants comparing themselves to comparators who are graded higher than them.

Short term (3–9 months)

• Where disparities are identified, run a remediation plan (harmonisation, regrading, uplift) with HR, finance and legal input.
• If you face or anticipate claims, run scenario modelling for liability (back pay, interest and project forward for a reasonable period required to remedy the situation) and assess settlement vs defence. Use representative sample calculations.

Ongoing

Embed gender-neutral job evaluation as part of pay governance and any pay review cycles.

How we can help

Whether you’re looking to take proactive steps to ensure compliance with equal pay legislation and require legal advice of key risk areas via an equal pay audit or if you’re currently facing an equal pay claim and need assistance with preparing your material factor defence or settlement strategy, our employment team is here to support you. Our team has significant experience in advising on equal pay claims, ranging from one-off individual claims through to mass equal pay claims involving thousands of claims. We can offer clear, strategic advice tailored to your business.

Get in touch to speak with one of our experienced employment solicitors.