Equality Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Equality Bill

Equality Bill
Part 5 — Work
Chapter 3 — Equality of terms

Insurance Group, which established that occupational pensions were equal pay for the
purposes of Article 119 of the Treaty of Rome. Where the application of the rule relates to the
terms on which a person becomes a member of the scheme, it has effect from 8 April 1976.
This was the date of the judgment in Defrenne v Sabena, where the Court, in holding that the
principle of equal pay was directly effective, indicated that Article 141 (formerly Article 119)
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of the Treaty of Rome should not be applied to periods of service prior to the judgment.
219. Where there has been a breach of a term modified by a sex equality rule, proceedings
may be brought against the person responsible for the breach under Part 9 of the Bill.
Background
220. The clause replaces equivalent equal treatment provisions in section 62 of the
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Pensions Act 1995.
Example
• A scheme rule requires employees to work full time before they may join the scheme.
There may be a breach of the equality rule because the scheme rule may have an
adverse impact on female employees, who are less able to comply with the
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requirement to work full-time.
Clause 63: Sex equality rule: consequential alteration of schemes
Effect
221. This clause gives trustees and managers of an occupational pension scheme the power,
by resolution, to alter scheme rules to conform to the sex equality rule in clause 62.
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222. They may use the power if:
• they lack the power to alter rules; or
• procedures for altering rules, including obtaining consent from another person (for
example the employer), are unduly complex or would take too long.
223. In line with clause 62, where the operation of an equality rule relates to the terms on
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which a person becomes a member of the scheme, any alteration made relying on this section
may only have effect from 8 April 1976. Where the alteration relates to a term on which a
member of the scheme is treated, reliance on this section may have effect only from 17 May
1990.
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Equality Bill
Part 5 — Work
Chapter 3 — Equality of terms

(a)
a term on which persons become members of the scheme, or
(b)
a term on which members of the scheme are treated.
(4)
A discretion is relevant if its exercise in relation to the scheme is capable of
affecting—
(a)
the way in which persons become members of the scheme, or
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(b)
the way in which members of the scheme are treated.
(5)
The reference in subsection (3)(b) to a term on which members of a scheme are
treated includes a reference to the term as it has effect for the benefit of
dependants of members.
(6)
The reference in subsection (4)(b) to the way in which members of a scheme are
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treated includes a reference to the way in which they are treated as the scheme
has effect for the benefit of dependants of members.
(7)
If the effect of a relevant matter on persons of the same sex differs according to
their family, marital or civil partnership status, a comparison for the purposes
of this section of the effect of that matter on persons of the opposite sex must
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be with persons who have the same status.
(8)
A relevant matter is—
(a)
a relevant term;
(b)
a term conferring a relevant discretion;
(c)
the exercise of a relevant discretion in relation to an occupational
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pension scheme.
(9)
This section, so far as relating to the terms on which persons become members
of an occupational pension scheme, does not have effect in relation to
pensionable service before 8 April 1976.
(10)
This section, so far as relating to the terms on which members of an
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occupational pension scheme are treated, does not have effect in relation to
pensionable service before 17 May 1990.
63
Sex equality rule: consequential alteration of schemes
(1)
This section applies if the trustees or managers of an occupational pension
scheme do not have power to make sex equality alterations to the scheme.
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(2)
This section also applies if the trustees or managers of an occupational pension
scheme have power to make sex equality alterations to the scheme but the
procedure for doing so—
(a)
is liable to be unduly complex or protracted, or
(b)
involves obtaining consents which cannot be obtained or which can be
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obtained only with undue delay or difficulty.
(3)
The trustees or managers may by resolution make sex equality alterations to
the scheme.
(4)
Sex equality alterations may have effect in relation to a period before the date
on which they are made.
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(5)
Sex equality alterations to an occupational pension scheme are such alterations
to the scheme as may be required to secure conformity with a sex equality rule.
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Equality Bill
Part 5 — Work
Chapter 3 — Equality of terms

Background
224. The clause replaces equivalent equal treatment provisions in section 65 of the
Pensions Act 1995.
Example
• The scheme rules of a large scheme require consultation with all the members before
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an amendment to the rules may be made. This is impracticable, particularly as some
deferred members cannot be traced. Scheme trustees may make the necessary
alterations to scheme rules relying on this power.
Clause 64: Defence of material factor
Effect
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225. As a general rule, if the work of two colleagues of the opposite sex is equal but their
terms are not, the sex equality clause takes effect. This clause provides that neither a sex
equality clause nor a sex equality rule will apply if the employer can show that the difference
in terms is due to a material factor which is relevant and significant and not simply because
one is male and the other female.
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226. If there is evidence that the factor which explains the difference in terms is indirectly
discriminatory on grounds of sex, the employer must show that it is a proportionate means of
meeting a legitimate aim or the sex equality clause will apply. For these purposes, the long-
term objective of reducing pay inequality will always count as a legitimate aim.
227. Subsection (4) deals with the application of the material factor defence to
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occupational pension schemes.
Background
228. The Equal Pay Act 1970 and Pensions Act 1995 made similar provision permitting
employers and trustees to objectively justify differences to which an equality clause or rule
would otherwise apply. This clause draws those separate provisions into one clause and
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clarifies the way in which they are to be applied. The reference in the former legislation to a
difference being “genuinely” due to a material factor has not been repeated in this clause since
the adverb added nothing to the meaning of the requirement, which is that the employer’s
obligation is to show that the reason for the difference is genuine and not a sham. The clause
incorporates the effect of EC law in respect of objective justification of indirectly
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discriminatory factors.
229. The reference to an employer’s objective of reducing pay inequality between men and
women always being considered a legitimate aim is new.
230. Examples
• An employer introduces a bonus payment to encourage staff doing the same work to
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work a new night shift to maximise production. Only a small number of female staff
can work at night and the bonus payments go almost entirely to male employees.
Despite the disparate effect on the female employees, the employer’s aim is legitimate
and the payment of a bonus to night workers is a proportionate way of achieving it.
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Equality Bill
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Chapter 3 — Equality of terms

64
Defence of material factor
(1)
The sex equality clause in A’s terms has no effect in relation to a difference
between A’s terms and B’s terms if the responsible person shows that the
difference is because of a material factor—
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(a)
which is not the difference of sex, or
(b)
which is within subsection (2).
(2)
A factor is within this subsection if—
(a)
A shows that, as a result of the factor, A and persons of the same sex
doing work equal to A’s are put at a particular disadvantage when
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compared with persons of the opposite sex doing work equal to A’s,
but
(b)
the responsible person shows that relying on the factor is a
proportionate means of achieving a legitimate aim.
(3)
For the purposes of subsection (2), the long-term objective of reducing
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inequality between men’s and women’s terms of work is always to be
regarded as a legitimate aim.
(4)
A sex e quality rule has no effect in relation to a difference between A and B in
the effect of a relevant matter if the trustees or managers of the scheme in
question show that the difference is because of a material factor which is not
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the difference of sex.
(5)
“Relevant matter” has the meaning given in section 62.
(6)
For the purposes of this section, a factor is not material unless it is a material
difference between A’s case and B’s.
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Equality Bill
Part 5 — Work
Chapter 3 — Equality of terms

• A firm of accountants structures employees’ pay on the basis of success in building
relationships with clients (including at after hours client functions). Because of
domestic responsibilities, fewer women than men can maintain regular client contact
and women’s pay is much lower. The employer is unable to show the way it rewards
client relationship building is proportionate, taking into account the disadvantage to
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women employees.
• In imposing a new pay structure which seeks to remove pay inequalities between men
and women employees, and to accommodate the interests of all the various groups, an
employer includes measures which seek to protect the pay of the higher paid group for
a short period of time. The intention to remove pay inequalities is a legitimate aim, and
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the question will be whether the imposition of the particular temporary pay protection
arrangements is a proportionate means of achieving it.
Clause 65: Exclusion of sex discrimination provisions
Effect
230. This clause ensures that the sex discrimination provisions of the Bill do not apply
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where an equality clause or rule operates (or would operate in the absence of a defence of
material factor or the exceptions set out in Part 2 of Schedule 7).
231. The sex discrimination provisions prohibit sex discrimination in relation to non-
contractual pay and benefits such as promotion, transfer and training and in relation to offers
of employment or appointment.
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232. The equality of terms provisions operate only in relation to the terms of a contract of
employment, the terms of appointment to a personal or public office and the terms of service
of members of the armed forces.
Background
233. This provision brings together sex discrimination and equality of terms provisions
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previously found in the Equal Pay Act 1970 and the Sex Discrimination Act 1975 and explains
how they work together.
Example
• A female sales manager is entitled under her contract to a bonus every year in
proportion to the number of sales her team achieves. She discovers that a male sales
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manager for the same firm doing the same job has a contract which includes a larger
bonus payment in relation to the same number of sales. Her claim will be dealt with
under the equality clause provisions.
Clause 66: Sex discrimination in relation to contractual pay
Effect
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234. This clause deals with sex discrimination in relation to contractual pay in
circumstances where a sex equality clause would not operate. This could be because there is
no colleague doing equal work with whom a claimant can compare their pay or other terms.
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Chapter 3 — Equality of terms

65
Exclusion of sex discrimination provisions
(1)
The relevant sex discrimination provision has no effect in relation to a term of
A’s that—
(a)
is modified by, or included by virtue of, a sex equality clause or rule, or
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(b)
would be so modified or included but for section 64 or Part 2 of
Schedule 7.
(2)
Neither of the following is sex discrimination for the purposes of the relevant
sex discrimination provision—
(a)
the inclusion in A’s terms of a term that is less favourable as referred to
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in section 61(2)(a);
(b)
the failure to include in A’s terms a corresponding term as referred to
in section 61(2)(b).
(3)
The relevant sex discrimination provision is, in relation to work of a
description given in the first column of the table, the provision referred to in
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the second column so far as relating to sex.

Description of work
Provision

Employment
Section 36(2)

Appointment to a personal office
Section 46(6)

Appointment to a public office
Section 47(6)

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66
Sex discrimination in relation to contractual pay
(1)
This section applies in relation to a term of a person’s work—
(a)
that relates to pay, but
(b)
in relation to which a sex equality clause or rule has no effect.
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Equality Bill
Part 5 — Work
Chapter 3 — Equality of terms

The clause enables a person who is treated less favourably than others by being paid less
because of the person’s sex to pursue a claim for direct discrimination in these circumstances.
Background
235. This clause is a new provision designed to allow claims to be brought where a person
can show evidence of direct sex discrimination in relation to contractual pay but is unable to
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gain the benefit of a sex equality clause due to the absence of a comparator doing equal work.
Example
• An employer tells a female employee “I would pay you more if you were a man”. In
the absence of any male comparator the woman cannot bring a claim for breach of an
equality clause but she can bring a claim of direct sex discrimination against the
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employer.
Clause 67: Relevant types of work
Effect
236. This clause sets out the types of work that are covered by the provisions for pregnancy
and maternity equality set out in the clauses which follow.
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237. Background
237. This clause replaces various provisions in the Equal Pay Act 1970, which set out who
is covered by the pregnancy and maternity equality requirements.
Clause 68: Maternity equality clause
Effect
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238. This clause requires that a woman’s contract must be read as including a maternity
equality clause. Clause 69 sets out how a maternity equality clause modifies a woman’s pay.
No comparator is required in these cases.
239. A maternity equality clause is capable of affecting the terms of an occupational
pension scheme but only in the way a maternity equality rule (as described in clause 70 would.
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This ensures that the provisions relating to pregnancy and maternity equality of terms at work
and the provision governing pension schemes in clause 70 operate effectively together.
Background
240. This clause reflects provisions of the Equal Pay Act 1970.
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