Hailed by politicians in the government as being "one of the most important pieces of social legislation progressed in the Isle of Man in recent times", the Equality Bill is steadily sailing towards finalisation and is expected, with a fair wind, to become part of Manx legislation during the course of this summer.
The proposed new legislation will consolidate, refine and expand upon the existing (and limited) patchwork of legislation dealing with discrimination and equality in the Isle of Man and make it unlawful to discriminate (directly or indirectly or by way of harassment) on the grounds of certain "protected characteristics", including sex, age, disability, gender reassignment, race (to include caste – a departure from the UK model), religion or belief and sexual orientation.
In this article, we take a closer look at the equality of terms provisions and how the Equality Bill is likely to change the current landscape. Helpfully, the Equality Bill is largely styled on the Equality Act 2010 (Act of Parliament) thus allowing us to draw on the experiences of our English counterparts on equality at work in practice.
What do we mean by equality of terms?
It is important to note that the Isle of Man has had the benefit of equal pay legislation for some years already. Indeed, the Employment (Sex Discrimination) Act 2000 provides for equality of terms for men and women doing "like work" or "work rated equivalent" to that of the opposite sex. This means that where two employees of opposite sexes are deemed to perform like work or work related on equivalent, the terms of one party's contract should not be less favourable than that of the other.
The Equality Bill will expand upon this by introducing the concept of equality of terms for work of "equal value".
Work is like work where the work of the man and woman is "the same or broadly similar".
In establishing whether the jobs are the same or broadly similar, consideration is given to the type of work involved, and the skill and knowledge required to do it.
If there are any differences in terms of pay (or other terms), it is for the employer to distance itself from the notion of "like work" and to demonstrate that there are differences in the work performed, for example different levels of responsibility/qualification or one party working unsociable hours or having additional duties.
The differences on which the employer relies however must be differences of "practical importance" in the work performed. By way of illustration, it has been held that a woman preparing lunch for directors and a man preparing breakfast, lunch and tea for employees did not constitute a difference of practical importance in the work performed so as to justify a pay gap. Likewise, a pay differential between male and female supermarket operatives whose role was to stack shelves was deemed to be unjustifiable where the only difference between the two sexes was that male employees lifted the heavier items.
"Work rated as equivalent"
A woman is regarded as employed on work "rated as equivalent" with that of a man if a job evaluation study has given an equal value to their jobs.
A job evaluation study is a study carried out by an employer which aims to evaluate, and in essence rank, the jobs done by its employees, by assessing the job against factors such as effort required, skill and decision-making.
In order to withstand challenge, the study needs to be analytical (that is to say, it must break down the whole job in various factors) and objective in nature.
Provided the employer has carried out a valid and non-discriminatory job evaluation, such study can be deployed as a complete defence to an equal pay claim.
"Work of equal value"
What, then, is the position of an employee who wishes to make an equal pay claim but (a) there are no employees doing a similar job and (b) the employer has not undertaken a job evaluation study?
This is where a claim for work of equal value comes into play.
It is particularly useful as it allows for jobs of entirely different natures to be compared against each other. By way of illustration, and drawing on English caselaw, a woman engaged in clerical work successfully compared herself to a male warehouse operative. Likewise, a female school nursery nurse successfully used a male local government architectural technician as a comparator.
A claim of work of equal value can be made where an employee can show that he/she does work of equal value to a comparator of the opposite sex.
Whether work is rated as being of equal worth is ascertained by reference to the demands made on the two employees (for example in terms of effort required, training/skills, conditions of work, the extent of decision making involved).
In order to bring an equal pay claim, a claimant must identify an appropriate comparator with whose contract they can compare the terms of their contract. The comparator must be employed by the same employer, or by an "associate of" the claimant's employer (i.e. a company over which the employer company has control, or a company which is under common control with the employer company by a third party).
In addition to this, the comparator must also either (a) be employed at the same establishment as the claimant, or (b) if he/she works at a different establishment, common terms must apply at the two establishments (either generally or as between the claimant and comparator).
What then happens if there are no actual comparators? An employee cannot conjure up a hypothetical comparator – indeed, the legislation requires an actual comparator to be used. Nonetheless, a claimant can compare themselves against an employee previously employed by the employer or by an associated company.
The need to show less favourable terms
Once an employee has established that he/she is doing like work/work rated equivalent to, or work of equal value to an appropriate comparator, the next step is for the claimant to show that his/her contract has terms which are less favourable than those of his/her comparator.
The comparison goes way beyond a simple arithmetical comparison of the employees' respective salaries. Indeed, equality of terms applies to all terms of employment.
The law requires a term by term comparison. In practical terms, this means that where a specific term of a woman's contract is less favourable than of her male comparator (e.g. pay), the employer cannot defend that claim by asserting that the female employee enjoys other more favourable terms.
Material factor defence
An employer will be able to deflect an equality claim if it can show that the difference in terms is due to a material factor, that is to say that (a) the difference is not due to sex discrimination and (b) that the difference is a proportionate means of achieving a legitimate aim. Employers have successfully deployed reasons such as market forces/skills shortages (and the associated need to pay certain staff more in order to recruit and/or retain them), and geographical differences as material factor defences. Red circling (where an employee's pay rate is approved to be above the established salary maximum for that position, and the employee is not eligible for further base pay increases until the range maximum surpasses the employee's pay rate) has also been deemed to be a valid material factor defence .
Time limits and remedies
Equality of terms claims will generally need to be brought within a period of six months beginning with the last day of employment. In a successful claim, the Employment Tribunal will have a variety of remedies available to it including an award of compensation amounting to up to 2 years of pay arrears.
The introduction of the notion of equal pay for work of equal value dramatically increases the range of positions within which parity of terms will be expected going forward. This will no doubt compel employers and their human resources functions to meticulously review their workforces' existing contractual arrangements and equalise terms where differences are found which cannot be justified on grounds other than sex.
Acknowledging the magnitude of the task, the Government intends to phase in the new legislation over 2 years to allow employers sufficient time to review their pay package structures. Whilst this should provide sufficient time for employers to put their houses in order, one thing is for sure – the Equality Bill, once introduced, will be here to stay and could land employers with the payment of hefty damages awards if they choose to ignore the new culture the Bill seeks to introduce.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.