Equality Bill

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The Chairman: Continuing the theme of gender pay audits and equal pay, I will call Lynne Featherstone, followed by Nia Griffith, Tim Boswell and Sandra Osborne.
Q 158Lynne Featherstone (Hornsey and Wood Green) (LD): I have one question each for Sarah and Katja. Last night I sat for two hours at the meeting of Unison and the Fawcett Society. The room was full, and every person who spoke said that the most important thing in the workplace was to have mandatory pay audits, yet they have been left out of the Bill. I wonder what Sarah thinks are the effects on women’s poverty in perpetuity if we cannot amend the Bill and include the audits.
Sarah Veale: It would be regrettable if the Bill was not an opportunity to introduce mandatory pay audits. We in the TUC have never said that they are a panacea or that they alone will solve the problem, but you will not be able to identify unequal pay until you carry out systemic monitoring to find out where and why the discrimination is taking place, and then hopefully work out workplace solutions for addressing it.
We have had years and years of reviews—equal pay has been reviewed more times than anything else. The Equal Opportunities Commission has done it, and we have had the Kingsmill review and the women and work commission. They have all said that it is essential to have pay auditing if you are going to crack the problem. However, the trouble is that they have all shied away from making it compulsory.
With the greatest respect to Katja, employers are simply not doing it enough. There are some who are doing it, admirably, who have found that it is not the problem that they thought it was going to be and that it has delivered huge benefits. However, there is a hard core in the private sector—the public sector is different—that simply will not do it. Until it is done, we will not be able to crack the problem, which is why the TUC has been adamant about pushing that point. I would add, however, that we do not think that that alone will solve the problem, and I agree with the proposition that there are a number of other extraneous factors, but you must do that, and again we urge the Government to do so.
Q 159Lynne Featherstone: It seems pretty much central to me, and we have seen that with exposure, publication and comparison—when people can see what is happening—you get it dealt with. That is the case in point.
Katja, we have met, and I have talked to the CBI, so we know where you are coming from: you do not think that that is the answer. Cost and the recession are often brought into the equation whenever this discussion occurs. The Government have said that this will be voluntary until 2013, which is, without question, four years too late. Two quarters of downward growth in returns signifies a recession. Would the CBI think that it would be a good move if I tabled an amendment to say that there should be two consecutive quarters of growth to signify the start of mandatory pay audits, so they would begin in either 2013 or after two quarters of growth—whichever came earlier?
Katja Hall: No, because mandatory pay audits would be the answer only if the main cause of the pay gap was discrimination between men and women doing the same job.
Q 160Lynne Featherstone: But how do we know?
Katja Hall: We know that that is not the main cause based on the women and work commission report and other research. Nobody has been able to establish that it is a factor, or how much of a factor it is. I am not aware of any research suggesting that that is the main cause of the pay gap.
There is a place for pay audits; many companies choose to do them on a voluntary basis. We survey our members on the issue every year, and we know that more than 50 per cent. of large firms now undertake voluntary pay audits, and they do so as part of their package on diversity in the workplace. Many of them find that useful. However, we also know that, in the vast majority of cases, when they find a pay gap, it is not between men and women doing the same job. We need to be realistic here: the audits are expensive, time consuming and bureaucratic. For a company with limited resources, there are often better and more effective ways of spending money than on a pay audit.
Q 161Lynne Featherstone: In terms of equal pay for equal work, in many companies the jobs of women are not the highest paid, and nor do women reach the highest end of the grade. There is discrimination that is about not equal pay for equal work, but what jobs are actually available to women. We cannot see that without exposure of the whole range.
Katja Hall: I do not think you can say that the fact that not enough women are in senior jobs in the United Kingdom is to do with employer discrimination. If you want to look at getting more women into senior positions, I suggest that you might need to look at participation levels within different organisations because pay levels would not give that information. If you want more women at senior levels, I still think that one of the best things to do is to encourage companies to offer more flexibility in senior jobs.
Lynne Featherstone: I am certainly not saying that there are not other issues.
Q 162Nia Griffith (Llanelli) (Lab): I am picking up a certain degree of negativity from the representatives from the CBI and the FSB about a form of compulsory pay audit. What sort of reporting would you regard as helpful for identifying pay gaps? Will you ask yourselves whether you really are an organisation that takes diversity and equality seriously? Most importantly, if you do not have some form of reporting, how do you measure progress?
Stephen Alambritis: With regard to the smaller business centres, I have intimated that the boss or employer—increasingly the female boss or the female employer—in the new archetype has females over 35 as employees. Increasingly, that person knows exactly who gets paid what, and good employers who want a good reputation and to access local authority and public sector contracts will do all that they can, and will probably have in place a structure through which everyone is paid equally. We worked with the Equal Opportunities Commission, as it was then, on equal pay toolkits for small employers, which worked very well. We are relaxed and content about the threshold and the acknowledgment that, for smaller employers, it is best to vouchsafe them before bringing them on to a regulatory element, so that they are free to employ more people.
One way forward could be to talk to the major audit industries and the Institute of Chartered Accountants to see whether they can provide a solution. The large companies—the CBI members—are audited annually by those in the industry. As for whether the audit on equal pay can be carried out at a reasonable rate, the audit industry should look at the cost argument.
Q 163Nia Griffith: The point of reporting is to communicate something from one person or body to another. I am not sure how your knowledge of this, that and the other, regarding a particular member of your organisation, can rely on a descriptive method of saying what is going on, rather than arising from something that is easy to see and analyse.
Stephen Alambritis: Well, 3 million self-employed people do not need audits—they do not have audits as such. We are talking about 1 million companies doing statutory audits. As for including businesses that do not have fiscal audits anyway in another audit, that would have a fairly regulatory impact. We approve of the exemption and the voluntary elements. If all that does not work, it is obviously up to the Government to think about whether there should be a mandatory element. I refer you to the equal pay toolkit that was devised by the EOC along with the Federation of Small Businesses, which was a solution to our members, and to think along those lines. The Equality and Human Rights Commission might be one way forward to get the message out.
Q 164Nia Griffith: So you would be encouraging your members to look at ways of reporting.
Nia Griffith: I am still unclear about how we communicate that in the small print.
The Chairman: Does anyone else want to come in?
Katja Hall: Of course, there is a trade-off between a simple metric figure, which would be easy to compare across organisations but would risk being meaningless if taken out of context, and a more descriptive or narrative form of reporting that might be more meaningful, but would not be as easy to compare. Where the CBI and most of our members come from on this issue is about what we need to do. Of course we need to encourage greater transparency, and of course companies need to have some idea of where they are in order to know where they want to get to, but where we would like to start is by finding out what works. I do not think that we have a clear idea at the moment about what companies are doing out there, and about what they find works and delivers progress. We know of companies that monitored for years and years and made very little progress, but then they introduced staff surveys and tracked the satisfaction rates of different groups of employees, which has enabled them to make real progress. For them, that has been a much more meaningful way of reporting—or whatever you want to call it.
In the first instance, we would like to find out what works and what does not. We would see us—the CBI—as having a role in gathering that information. On that basis, we think that there could be merit in developing, in a sense, a basket of indicators that companies could pick and choose from when it comes to transparency. That might be an equal pay figure, but it might be such things as female levels of participation, participation of women at different levels within the organisation, take-up of flexible working and possibly even child care—there is a range of indicators. What works in one company and is meaningful in one company would not necessarily be meaningful in another company. However, if companies first find out what works, then we spread that message of good practice and, thirdly, give employers the tools from which to pick and choose, we think that real progress could be made.
Q 165Mr. Boswell: I would like to ask Sarah Veale—others may want to contribute—a little more about part-time workers. My first question is a sort of technical one, which is whether the threshold would pose greater problems for employers who typically have a large part-time or fluctuating work force. I think you are nodding, but is that at least a potential—that setting a threshold for audit might create difficulty?
Sarah Veale: It is clearly much more difficult if you have a work force that is peripatetic or working various or different types of hours.
Mr. Boswell: And expensive, presumably.
Sarah Veale: It would be more expensive but, again, the costs are initial. Once you have worked out the metrics and whatever, I do not see that it would be any more complicated. Employing part-time workers often gives employers a greater degree of flexibility and there is nothing wrong with that at all, but that greater degree of flexibility sometimes comes with more demanding administrative costs.
Q 166Mr. Boswell: Thank you. I wanted to touch on the question of the discrimination that may or may not be inherent in part-time work. My suspicion would be that there is a structural imbalance between part-time employees and full-time employees—in terms of their remuneration—that is gender neutral. Secondly, there may well be an indirect form of discrimination, because females tend to occupy more of the part-time positions. There are two factors operating, both of which in a sense are discrimination, but one of which is not particularly inherent in the Equality Bill—it may be, but in a different way, and it is not gender discrimination. Would you see that as a reasonable interpretation? Do you think that you can differentiate the factors arising from gender discrimination from what I might call structural discrimination—by the nature of whether the employment is full-time or part-time?
Sarah Veale: One of the problems with the law is that disentangling the two is difficult, because of how equal value is done. The problem with part-time work is that the question may not simply be one of possible indirect discrimination in the workplace. A lot results from people’s lives outside work and the reasons why people work part-time. The reason why more women work part-time is that they still tend to be the prime carer at home.
Q 167Mr. Boswell: There could also be people with a mental health condition, for example, or a disability.
Sarah Veale: Absolutely, or older people who want to phase themselves out of the workplace and do two or three years part-time as they go. You would have to differentiate and weigh in some of those factors. I do not think that makes the operation undoable, but as I was saying earlier, it makes it slightly more complex. Certainly, the TUC has always highly encouraged part-time work, but the problem with it is that employers, and often society, do not value it in the same way as full-time work, even if the person is doing exactly the same as their full-time equivalent.
We know of examples of job-share schemes where employers have taken on two or three part-time workers to do a full-time job. If it is managed well, you get huge benefits. You get one and a half times what you would get from one person. Good managers will appreciate how to deal with what are often societal demands for a more flexible approach to how people do their job. I do not know whether that helps. The trouble is that equal pay law is not really being touched in the Bill. It is immensely complicated—more complicated than the laws affecting discrimination against part-time workers, which are a separate but linked issue—and probably a lot more work needs to be done on it.
Mr. Boswell: Thank you.
Q 168Sandra Osborne: The legislation to date has not provided the remedy that it should have provided after such a long period, and there are all sorts of other complications that have been discussed, on which progress has also not been made. It is also difficult for individuals to seek redress in the current circumstances. What are the panel’s feelings about the idea of representative actions, in which groups of people could take action at the tribunals? Would that make the system more efficient and possibly even cheaper? Would it provide a better remedy for individuals and a more positive way forward?
Sarah Veale: Do you want me to start? That is one of the TUC’s propositions, although I am obviously very interested to hear what everyone else thinks. We put it forward because, particularly with the large multiple cases and specifically on equal pay, the current system does not allow you to group together very efficiently the common points of law that exist across a grade of staff against whom you are alleging indirect gender pay discrimination. The joy of representative actions would be that an organisation such as a trade union, or maybe a citizens advice bureau, could be given a locus to identify the key legal issues and run a representative test case, if you like, to which all the individual women would have to sign up.
Our view is that that would enormously expedite litigation. At the moment, we have cases where women make a submission and, after it has gone through the various appellate stages, it is not finally resolved for 11 or 12 years. One of our unions told us that, tragically, one or two of the women they represented died before receiving the benefits of the compensation that they were owed. Clearly, anything that expedites the process would be enormously helpful, so we have put that forward. We are grateful to the Ministry of Justice for looking into the issue and seeing what might be done.
I emphasise for the record that we are not talking about class actions. We are not talking about allowing members of the public to sign up willy-nilly to any cause that they might think affects them. The case would be specifically marshalled, and the locus would be given only to groups such as trade unions and perhaps the Equality and Human Rights Commission, which could do it expeditiously and curtail it, and not expose employers to wildcat litigation. We firmly recommend it—certainly to be looked at—as a means of helping the process work more efficiently and much more cheaply.
Katja Hall: This is an issue where the CBI and the TUC disagree quite strongly. We think that it is a myth that representative actions would somehow streamline the system and facilitate the progress of such claims. Whatever system you have, you cannot avoid looking at each individual claim at some stage. The question really is whether you front-load or back-load it. Whatever system you have, you still have to assess the individual claims.
We think that under the current system there is already the ability to look at claims and group them together. We think that could be used much more widely to speed up the processes involved. We also need to be realistic about the other potential risks of representative action. Sarah helpfully says that the TUC is not pushing for class action, which is welcome, but I am not sure that the line between the two is always that clear. We already know that employers—especially small firms—do not have much faith in the employment tribunal system. There is a real risk that representative action would lead to a more litigious society and greater pressure on employers to settle cases even when they are pretty sure that they would win.
Dianah Worman: We can go almost full circle because the process is back-loaded; it is a technique. Employers need to understand why it makes sense to look at the concept of total reward and how to better manage the pay bill. In that way they signal the fact that they are valuing their employees. Looking at flexible working and part-time working may, as a result of doing an audit, expose the fact that they are not valuing those people in the right way—they are not accessing bonuses and so on and so forth—and they are getting disparities. It would be much more effective to front-load and educate employers, give them the good practice guidance and build on the expertise we have had over the years, but expand that through the provisions that are allowed by the EHRC taking forward the guidance. That is critical. You cannot do this stuff unless you understand what to do. Simply being told that you have to do it in law is not the answer. I am afraid that we have to spend a lot more time investing in helping people to understand why the proposal is sensible. That is why it makes sense to push the concept of the business case for diversity so people get the message and their mindsets switch and they begin to drive the agenda in a much more proactive way.
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