Equality Bill

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The Chairman: Thank you very much. We will have a very brief interjection by Stephen Alambritis, then we will move to Evan Harris. I should then like us to move on to some of the other matters that need to be addressed.
Stephen Alambritis: My members want access to justice themselves. They get free legal advice on employment issues from the FSB. If they take any action in contravention to that advice, we will not support them in the run-up to an employment tribunal. Likewise, staff deserve access to justice. I think that in the early ’90s, there were 30,000 employment tribunal cases and the latest statistics show something like 200,000, so there is an increasing tendency for employment disputes to end up at employment tribunals. What we do not want is vexatious applications that undermine the confidence of employers, both large and small, in the employment tribunal system. Some years ago—about four or five years—we helped one of our members through an employment tribunal case. The judge awarded £10,000, which is the highest that can be awarded, against the worker because it was so vexatious and litigious. We need to ensure that it is a fair system. Behind all those stats, there are the areas to which Katja referred where there is an agreement to close the case even though the employer is fully justified in carrying on. We need to get that balance right. We need access to fair justice for both sides.
The Chairman: Thank you. Evan Harris and then John Howell.
Q 169Dr. Harris: I just want briefly to clarify the CBI’s position because I do not want it to be misunderstood. Hopefully, these questions can be answered quite quickly. Do you accept that there is a pay gap between men and women at the moment that is unacceptable—for whatever reason?
Katja Hall: Yes.
Q 170Dr. Harris: Okay. I think that you have accepted that part of that gap, even if you do not think that it is the main part, is due to illegal, gender-based pay discrimination—on average; not in every company.
Katja Hall: A very small part.
Q 171Dr. Harris: Is your problem, therefore, that you do not think that pay audits will solve the problem of dealing with this illegally caused and unacceptable gap, or is it that you think that it is at too high a price, or both?
Katja Hall: We think that if an employer is discriminating, it is unacceptable. We have a strong legislative framework in place with uncapped compensation so that the employee can seek redress. But if you want to make real progress on the pay gap, pay audits would be barking up the wrong tree.
Q 172Dr. Harris: So you do not think that they would be effective? What evidence can you cite that the existing law, and/or the practices of leadership programmes about which you have talked have made a significant difference to reducing the pay gap? It may have kept it the same—it has not got wider thanks to all these little initiatives—but what evidence can you cite me, with a reference, that suggests that our existing legislation is dealing with the problem of the last 40 years?
Katja Hall: I think that I am right in saying that in 1970 the pay gap was 37 per cent., and it is now 13 per cent. if you look at median earnings. So clearly, the pay gap is shrinking, but it is not shrinking by as much as we would like and progress is not as quick as we would like. But to say that there has not been progress would not be true.
Dr. Harris: Sarah Veale, is that your view?
Sarah Veale: I dispute those figures. I think that the gender pay gap has been somewhat underestimated there, so I disagree quite strongly. The fact of the matter is that it has been stubbornly stark on what is a much higher figure for part-time workers, which, by the way, is nearer to 40 per cent. I do not think that indicates that 40 years of a piece of legislation has worked on a voluntary basis and with a few employers being kicked willy-nilly into the tribunals.
I think that there is a problem with the individual basis of the law. You need more collective solutions, but it is not working. Any other piece of law that had not been working for 40 years would be a cause of national outrage. It is illegal to discriminate, yet it is happening.
Katja Hall: The figures compare the median earnings of full-time and part-time employees. There is nothing wrong with them. You may choose a different figure, for example, looking at only full-time or only part-time. You may choose the mean instead of the median, but there is nothing wrong with the figure itself.
As to why there has not been more progress, to know that, we need to understand the causes. As we have already discussed, they are complex—they have to do with our education system, with child care, women’s experience in the workplace and things such as flexible working.
Dr. Harris: I do not want you to repeat everything that you have said.
The Chairman: Thank you. Can I just say to colleagues and witnesses that I would like to move on to other matters at 12.15 pm, because there are other issues to be explored. I have just called an Opposition Member, so I will now call Vera Baird and then John Howell. It would be helpful if both questioners and witnesses could tailor their remarks accordingly.
Q 174The Solicitor-General: Can I ask three quick questions? First, Katja, do you accept that equality and diversity are good for business, and not its enemies? Stephen and I are assuming that you do, because of what you said. Let me ask that of you as well, Dianah. You have made the position clear.
Secondly, you have talked a lot about direct discrimination and how small you think it is. Indirect discrimination can only really be disclosed by transparency, which requires some process to reach. Perhaps we are talking not about culpable employers, but about employers who do not know that they are paying unequally because of some historic system—they have never gone through it and done it in a systematic way. Do you agree?
Thirdly, you were looking, a short time ago, at what you think would work for businesses in terms of improving gender equality more broadly, but particularly the gender pay gap. You were talking about a quest for a basket of indicators, which would inevitably include pay. That is a good proposition, is it not? That, I think is what the Equality and Human Rights Commission is going to be asking the CBI to join in doing with the TUC, precisely to look for those indicators. That can fit on some metrics, and we can properly measure pay disparity—we seem to be allied there about that—but do you agree further that what is really important is that that should be done, and then everybody should be asked, however involuntarily it is put to them, to comply with disclosing those measures? That way, we can see, even if it has to be done differently sector by sector, what companies A to Z are doing about their pay. The point, surely, would be to get those metrics worked out between employers and employees as a group, and then move it into all of your sectors. Would you take responsibility, as the CBI, for driving that disclosure through all your businesses?
Katja Hall: Yes, of course I agree that equality and diversity make good business sense and are important. Not only does it enable employers to recruit from the widest possible pool of employees, but we know that employers need to respond and serve the customers of the markets in which they operate, and to do that effectively, their workplaces must be diverse.
On your question about indirect discrimination, I think that it is important that companies continually look at their pay systems. There are a lot of ways of doing that. We talk to members every day about the different ways in which they look at their pay systems and make sure that there is not bias within them. It is not just to do with different jobs and whether people are paid the same. It is to do with things such as starting salaries, women taking time out of the labour market, and, if you have an incremental pay scale, making sure that women do not fall behind because of that. Of course companies need to assess their pay systems and make sure that they are fair. On your question about disclosure and transparency, the CBI would definitely be keen to be involved in an exercise that shows the different ways in which meaningful progress can be made to tackle the pay gap.
Q 175The Solicitor-General: I just wondered about the answer to the third question. Will the CBI take responsibility once the metrics are worked out with the rest of it for driving the requirement through its membership to comply with disclosing those metrics?
Katja Hall: We would absolutely encourage our employers to use it if we come up with a system that works, but I have to be equally clear that we do not support a legislative solution in this area.
The Chairman: I have had expressions of interest from colleagues in asking questions about contract workers, agency workers, disability and positive action. I do not know what John Howell wants to raise, but he has been waiting patiently.
Q 176John Howell (Henley) (Con): I would like to move on to a couple of questions relating to age discrimination. The first one relates to issues around the mandatory retirement age. My first question is about attitudes towards that and whether you think that will help. The second is to try to get a sense of where you see the balance in terms of helping to end age discrimination. Is abolishing or decreasing the mandatory retirement age going to achieve more compared with a lot of other measures that can be introduced to encourage employment for people in the 50 to 69-year-old bracket?
Stephen Alambritis: The FSB is of the firm view that there is no justification for any employer to discriminate on grounds of age. Employers look to the Government to set an age for retirement that would focus everyone’s minds. Small employers, in particular, do not have the resources to try to decide a way through what should be the retirement age of their staff, so a retirement age decided by the Government is a focal point for small employers in particular. If one of our members has a member of staff who is valuable, loyal and productive, and there is a strong relationship with the business, they would strive to do all that they could to keep that member of staff on. We do not see any element of age discrimination as a huge problem within the small business sector.
Q 177John Howell: What about the CBI?
Katja Hall: We supported the age discrimination legislation when it was introduced. We believe that it is right to have a default retirement age. We supported the right to request postponement of retirement. That system is working well. It is encouraging employers and employees to have a discussion about retirement. Based on survey evidence that we have conducted, the vast majority of the requests are accepted. As far as we are concerned, the current system is working well at the moment. We have accepted, though, that the Government are committed to reviewing it in 2011 and we will respond to that review, but we do not think that it would be right to get rid of the default retirement age altogether.
Q 178John Howell: I think I saw the TUC representative shaking her head.
Sarah Veale: We have been around this course a few times with the CBI. We find it very strange that you have a piece of anti-discrimination legislation that has sitting within it almost a green light to discriminate. The good employers will know how to manage retirement properly. If you retain a mandatory retirement age, it allows sloppy practices and it does not make employers think carefully about whether the individuals are actually fit and capable and want to carry on. The CBI has its evidence. We have evidence that suggests that the meeting that you can have with the employer to discuss these things is very weak. The employer is not obliged to give any response whatever. The absence of complaints simply means that there is not a process for putting those complaints through. We at the TUC would encourage genuine flexibility of retirement, bearing in mind people’s access to their pension schemes. That is another issue—some people cannot afford to retire early while others might want to do so for all sorts of different reasons. It is a complex issue, and we welcome the review that will take place and will submit our views. We feel that this provision must be taken out of the system, as it is inherently wrong to allow for discrimination within anti-discrimination legislation on such weak grounds.
Dianah Worman: We never really supported the default retirement age, which we felt was a compromise when it was introduced. There is no real reason to have an end point and a mandatory retirement age. Many organisations have abandoned mandatory retirement, and there are strong arguments at national, organisational and individual levels for having a more open-ended situation. If people can and want to work for longer, and are able deliver value to an employer, they should have the opportunity to do that. If the employer wants to carry on working with someone, why set up a system that stops them from doing that without jumping through unnecessary hoops?
This is not only a UK issue. Changing demographics are affecting countries around the world and we must change our mindset about when retirement might be. Do we need to revisit the concept of retirement? Many people are living longer, healthier lives and are still fit. The concept of being 60 today is more like being 50 or 40—people feel a lot younger than they used to 10 or 20 years ago.
Having an end point does not make sense. The problem is that people do not like dealing with difficult situations and managing people. That goes back to the crux of the argument about good people management, which has been behind all the conversation we have had today. If we were better at managing people—and we have lots of advice and guidance on how to do that better—we would not have the difficulty of needing to set up a legal framework that makes it more difficult to retain the talent we need. We must ensure that we can manage the talent pipeline better, both at the younger and older ends, or businesses will miss out on the skills that are needed.
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