Equality Bill

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The Chairman: I will bring in Maleiha Malik, after which I shall bring in the Minister and finally, Tim Boswell, because I know that he wants to talk about public function and possibly multiple discrimination.
Maleiha Malik: On the issue of conscientious objection, there are provisions in the legislation through indirect religious discrimination provisions to allow some accommodation of religion and belief in areas such as the workplace. My organisation is strongly against further accommodation of conscientious objection, especially in the public sector for the following two reasons. First, we are very strongly against it when the conscientious objection in and of itself constitutes a breach of the constitutional right not to be discriminated against by another person. That would be the case, for example, of the Christian registrar—the Ladele case—who wanted the right not to perform civil partnerships. The case was decided in an industrial tribunal and we endorse the decision of Mr. Justice Patrick Elias at the Employment Appeal Tribunal, who held that, in fact, she had no right to conscientious objection. Our pragmatic reason is that it is wrong, as a matter of principle and practice, to send out a signal that there can be segregated public services when public officials should, rather than setting the tone of discrimination law, be at the forefront of discriminating against users of public services.
The Solicitor-General: I wanted to ask about multiple discrimination, but Tim was about to ask about it.
Q 147Mr. Boswell: The Government’s suggestion is that it should be possible to provide for multiple discrimination protection when there are multiple protective characteristics. Will that make the law simpler or will it create further complexities, which will be difficult to navigate other than through the courts?
Maleiha Malik: The law is already very complex on that because the different grounds of discrimination mean that people are picking and choosing the grounds. It is actually being resolved. We proposed two things.
Q 148Mr. Boswell: But is there an added benefit of looking at them ensemble?
The Chairman: Any further questions for this particular set of witnesses? I have speeded you up a little too much. We seem to have a minute left. If hon. Members have no further questions, I thank the witnesses very much for coming along today and answering their questions. I am sorry if I had to move them along from time to time.
I am now about to ask the next set of witnesses to take their place during which time my colleague, John Bercow, will take over as Chair of the Committee.
[John Bercow in the Chair]
11.31 am
Q 149The Chairman: Good morning to the next five witnesses. My name is John Bercow; I am the Member of Parliament for Buckingham and am in the Chair for the next evidence session. We are due to hear evidence from representatives of the Confederation of British Industry, the Association of British Insurers, the Federation of Small Businesses, the Chartered Institute of Personnel and Development and the Trades Union Congress. Welcome to our meeting this morning. I ask each of the witnesses, please, to introduce themselves to the Committee—starting with Stephen, on my left.
Stephen Alambritis: I am Stephen Alambritis, head of public affairs at the Federation of Small Businesses.
Nick Starling: I am Nick Starling, director of general insurance and health at the Association of British Insurers.
Dianah Worman: I am Dianah Worman, new diversity adviser for the Chartered Institute of Personnel and Development.
Sarah Veale: I am Sarah Veale, head of equality and employment rights at the Trades Union Congress.
Katja Hall: I am Katja Hall, director of employment at the CBI.
Q 150John Penrose (Weston-super-Mare) (Con): It is a pleasure to have you in the Chair, Mr. Bercow, and at short notice.
I want to ask each of the panel members quickly some questions about gender pay audits. I was particularly struck by some of the estimates in the impact assessment—the costs of a gender pay audit for companies in the private sector. Pages 138 and 139 of the impact assessment say that the one-off implementation costs of a gender pay audit would be £92.24 per company and the ongoing, annually recurring costs would be £15.38 per company. Do any of you have views on how realistic those costs are?
Q 151John Penrose: Do you have any idea, roughly, what order of magnitude you would expect?
Katja Hall: We do not have any statistical figures. We have asked some of our members what they think the costs involve in doing pay audits. The views range. One member said that they think the cost is equivalent to having one employee working on nothing else for a month or two. That was quite a small firm. A medium-sized firm with about 700 employees—if I remember correctly—estimated the cost of a pay audit to be £14,000.
Q 152John Penrose: Does anyone else on the panel have a view on this?
Sarah Veale: It is probably quite difficult to make assessments. I assume that questions have been asked of companies that already do it, which could produce a realistic figure and say, “It costs us this much.” There are huge variables between different sectors. A lot depends on how companies organise themselves. A well-organised company with a good payroll system ought to be able to identify such things relatively cheaply. If you have never done it before, it will be front-end loaded. The first time you do it, it will cost quite a lot, but as soon as you have got it into your systems, and you are doing it regularly, it would not be a particular administrative cost. For a smaller firm it is a different exercise. In a very small firm, you can simply look around and you will know almost off the top of your head who has paid what for doing what.
Q 153John Penrose: And the Government are only proposing it for businesses with 250 employees or more, I think. The Government would agree with you that it would cost more up front. They think the set-up costs would be £92 and then £15 ongoing. Does that seem reasonable to you? Does anybody else on the panel have any evidence? Have any of their members been consulted on whether these are reasonable?
Sarah Veale: It seems reasonable to me if you agree with the principle that you should eliminate gender pay discrimination. If you are going to do that, you have to find out where it is going on. You might find that it is not going on, in which case that is good for your company.
Q 154John Penrose: Sorry, I mean is the cost a reasonable estimate of the true cost?
Sarah Veale: As I said before, it varies so much from company to company. You are always going to get a very crude analysis, unfortunately, so I would not like to say.
Stephen Alambritis: We are very relaxed about this aspect of the Bill. As you know, it applies to companies with more than 250 staff. That is 9,000 companies in total out of a company ratio of 5 million in the UK. We have a pyramid system. We have millions of tiny small businesses and just a few thousand very large companies. The vast majority of small firms would be excluded from this, so we are very pleased with that aspect. It could be that some of the costs would be passed on through the fees from organisations like Sage and through the accountancy profession. But small firms would be completely and totally excluded from the imposition, and we are very pleased. We lobbied for that and got it.
Dianah Worman: I cannot comment on the costs. As Sarah said, it probably varies from organisation to organisation, but where we come from, it is just good business sense to know how you are spending your money and how you are managing your pay bill. Your approach to that ensures that people who work for you feel that you value them appropriately. So our position is to encourage voluntary activity because it is just a common-sense way of managing things. The costs may vary, but why would you pay money out to people without knowing whether it is effective? We encourage the voluntary approach—very much so.
Q 155John Penrose: Thank you. Can I move on to the broader issue of the gender pay gap and how one addresses it? I expect and hope that everybody here would agree on the principle and importance of trying to deal with it. I am interested in how much of the gender pay gap you believe can be sorted out within companies, as opposed to it originating there and needing to be dealt with through action elsewhere in society and the community as a whole. Equal Opportunities Commission research says that 38 per cent. of the gender pay gap is due to
“other factors associated with being female”,
which include “direct discrimination”, and also a variety of indirect factors and “systematic disadvantage”. I am concerned that we might be looking at a relatively small proportion of the gender pay gap in company activity and action. Do any of you have views on whether that analysis is correct?
Stephen Alambritis: Firms in the UK small business sector typically employ 10 or 20 people. The staff have a very close relationship with the employer and talk to each other regularly. We believe that the element of a gender pay gap within the small firm sector is very tiny. I have used the word “sector”, and the best way to address the gender pay gap is to look at it sectorially. It is particularly such sectors as those involving catering, supermarkets and part-time work that might require company targeting. In terms of business size, we do not think that any exercise within the small firm or research sectors would unearth huge gender pay gaps.
Sarah Veale: I would suggest that there are a number of contributory factors, as is suggested by research from the Equal Opportunities Commission. The TUC has never said that the gap is due solely to the fact that employers are discriminating, either indirectly or directly, but there is clearly a sex discrimination element, which is why pay auditing is important. There are other huge extraneous factors, such as the availability of flexible working, and measures to facilitate women returning from maternity leave and to provide the extra training that they might need to catch up. It is a complex picture, and a lot will depend on what the company does and what sort of people it is trying to recruit.
We would still argue that sex discrimination—usually indirectly, but occasionally directly—is an important factor, and something within the employer’s control. That is why the TUC has been concerned to ensure that measures are in place to work out what the problem is and to promote workplace solutions. We are pushing hard at the idea of developing people within the work force who can work with employers to identify and deal with those complicated issues, and we hope that the Government will support that. Union equality reps should be given the statutory rights that other union representatives have to help employers to work on equality issues and eliminate discrimination. That would save the public purse a lot of money on often unnecessary litigation, and it would solve systemic problems in the workplace, which is where they need to be solved.
Q 156John Penrose: I want to ensure that others have a chance to answer that point, but I think that the Government’s estimate is that there will be a 1 per cent. reduction in the number of tribunal cases as a result of this. Do you think that that is a large benefit—and is that figure right?
Sarah Veale: I think that you can get far more than that just on matters of equal pay, which is now one of the biggest jurisdictions in the employment tribunals. If we can deal with an unequal pay system, that would remove literally thousands of claims from the tribunal system for a large workplace. As long as it is pitched right, the training is available and people can have the time off to do that training, we could effectively take a lot of cases out of the system. I think that the number would be far more.
Q 157John Penrose: That is useful—[Interruption.] I am sorry, I should allow others to respond.
Dianah Worman: As Sarah was saying, there are a lot of issues that can cause problems. Poor management practice can lead to issues of unfair or unequal pay, which is why the auditing process is very important. Digging deep to find out the causes of the situation would mean that an employer could manage their pay bill far more effectively.
This is a complicated matter, and there are many issues that are not under the direct control of the employer. There are issues about women preferring to make decisions about what jobs to go for, and the trade-off decisions that they might make in terms of access to part-time work versus pay levels—that is very important—or the distance they need to travel to work. Another issue might be the confidence levels that women have regarding bargaining for pay in the first place. Those complicated issues must be dealt with on all fronts, not just left as the responsibility of the employer. Employers need to get their act together, and it is common sense for them to do so, but we need to work in partnership on this issue and not simply depend on the usual defence of market rates. Market rates can have an inbuilt bias, and we must be conscious of those dimensions and ensure that we work together more coherently to deal with the gender pay gap.
Katja Hall: We agree that the causes are complex, and if we want to make progress, we must find a holistic solution that tackles the education system, the choices that girls and boys make at school and the fact that vocational training still has such a strong gender bias. We must also look at child care and the choices that women make to take time out of the labour market.
Employers also have a role and they can—and should—do more to help women to progress in the workplace. We suggest that more progress can be made by looking at issues such as flexible working, particularly at senior levels within an organisation. We should look at things such as leadership training for women, and performance training for line managers in some cases, to ensure that there is no bias. We should also look at things such as networking and mentoring schemes that help women progress in the workplace. Companies all have different challenges, and they need to be able to find the solutions that work for them and deliver real progress.
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