There will be compulsion in the public sector, and that will start the day this legislation comes into force. In the private sector, we have seen a new understanding emerge that prosperity in business goes hand in hand with equality and diversity-and we are keen to encourage that. It is not just a question of waiting for something to happen. That is why, even before the Bill becomes law, the commission is working
to produce, within a matter of weeks, the measurements that it will ask the private sector to implement. Those measurements have been arrived at-or almost arrived at, as they are not quite ready-with the full buy-in of the major employers' organisations. I have met the representative of the CBI-she and I almost have a mobile road show going, together with someone from the TUC-many times on this issue, and she asserts voluntarily, without being pressed into doing so by me, that she intends to drive through compliance with these measures by her employers. If we can harness that power from both sides, it will be much better than engendering conflict by introducing a mandatory scheme that has not worked elsewhere.
John Penrose: I have seen announcements from the EHRC saying that it would not be able to publish some of the details of the proposed measurements until 2012 or 2013, but the Minister has just said that they will be published in the next few weeks. If that is true, it is tremendously welcome and very good news. Can she confirm that those earlier press announcements were misinformed and that the details are due soon?
I want to make it clear that we consider our approach to be the right way forward. As I have done in the past, I commend and cheer on my hon. Friend the Member for North Ayrshire and Arran. She has a fantastic record in her private history of chasing the issue of equal pay, and she has had incredible success. She is obviously highly skilled as well as incredibly committed, and I make no mistake in saying that she speaks with feeling and a high level of knowledge. However, in the past, she has had difficulties-I am well aware of the laboriousness of such legislation and litigation. Over the years she has been contending with this matter, there has been neither the obligation for transparency in the public sector nor the pressure that there will be for transparency in the private sector. To progress very quickly, we need the buy-in of both sides of industry if possible.
I could rehearse more of the arguments made in Committee, but they have been adequately heard and what I have said summarises them reasonably well. I am anxious to satisfy all parties on our absolute determination that the Bill will, among many, many other things, accelerate the move towards equal pay for women.
New clause 26, tabled by the Conservative party, would require a more specific position, which is that employment tribunals should order mandatory equal pay audits whenever an equal pay case is lost by an employer. That was presented in a three-clause Bill in the Lords-it was one of the clauses-but was taken apart by Lord Lester, who is not a member of the Labour party but who did a skilful demolition job none the less. The new clause is tokenism and would make little difference to tackling the gender pay gap, not least because its effectiveness depends on a case being won in an employment tribunal.
Let us look at the employment tribunals. In 2008-09, there were more than 100,000 public sector cases, almost all of which-I cannot say all-involved bodies that had already undertaken equal pay audits under the single status requirement, which has been battling on
since 1997. Often the results of equal pay audits are the very reason cases are brought. It would not be sensible for it to be compulsory for a tribunal, in trying to unpick the aftermath of a pay audit, and to ensure that it works and drives the move towards equal pay, to have to order another one. That is the long and short of how nonsensical the proposal is.
Few private or voluntary sector organisations reach an employment tribunal. In 2008-09, when there were 100,000 public sector cases, there were 1,574 non-public sector cases. There is much to be said about such a small number and the need for things such as representative actions, and I shall come to that in a minute because it makes my point while requiring me to make another one about representative actions. However, the new clause is completely undesirable because it would remove any discretion for employment tribunals, which would have to order equal pay audits-that is not what judges are for-in circumstances where they consider them wrong, unnecessary or inappropriate.
Conceivably, there could be instances of individual cases that do not reflect systemic equal pay problems. One wrong move by a business and a tribunal might have no other option than to order a mandatory equal pay audit across that business, however big it might be. If an employer is found to have breached equal pay law, it should, as a matter of common sense and good management, want to assess what changes it needs to make to avoid further claims, and it will. We oppose the new clause, therefore, and think that it is just a token gesture.
Let me turn to new clause 4, which is about representative actions and which was also supported, strongly, wholeheartedly and with great power, by the hon. Member for Hornsey and Wood Green (Lynne Featherstone) and my hon. Friend the Member for North Ayrshire and Arran. As I have said throughout, our mind is not closed to the future of representative actions at all. Taking full-time and part-time pay together-that is how we must take them, otherwise we will be putting part-time workers into a less virtuous category-there is a 22 per cent. pay gap, and that simply will not do.
We understand totally that unequal pay is often systemic. As I have said, there can be isolated cases, but it is often systemic. Sometimes unequal pay is deliberate, but often it is just there and it needs rooting out by transparency. However, that needs to be driven not by some poor isolated individual who has been required to put their whole future and the money at stake and who is sometimes required to summon up the courage to go forward. Rather, we need support for people and better access to justice. We are in no doubt that we must look to do just that.
However, representative actions in the area of law covered by the Bill have some particular difficulties. We recently carried out research into how representative actions would work for equal pay cases and into the complexities, which are as follows-my hon. Friend is not in her place now, but she will follow them when she reads this. Before I itemise the problems, let me say that there are polarised views on the effectiveness of representative actions. Indeed, not even all the trade unions that are active in equal pay matters-the trade unions from which representatives would be drawn-are at one about how effective the introduction of such measures would be.
There is a strong school of thought that says that what my hon. Friend talked about-the ability under the current rules to draw out a class action and use it as a testing ground and model-can be beefed up by changes to the rules. Indeed, that approach is already in use and effective. There might be other ways forward; my point is simply that there is no unanimity even among the people who would be the representatives and from whom one would expect the drive to come.
However, the problems include the extent to which costs should be borne by the losing parties in tribunal cases, which they do not currently; how such cases should be funded; whether claimants in such cases should have to opt in to a representative action or whether they should be assumed to be a part of it unless they opt out; how to resolve a dispute between an individual claimant and the representative party; how damages should be awarded; and how they should be distributed to a successful class of claimants.
There are a lot more issues to work through with regard to employment tribunals than with regard to the civil courts. Representative actions are permitted in a limited way in the civil courts, so when representative actions are introduced for consumer and financial services cases, for example, we are building on a legal framework. However, there is absolutely no similar mechanism for employment tribunals, so introducing it for such cases would be a departure.
A further point to make about the complexity is that discrimination cases are often linked to other kinds of cases, such as unfair dismissal cases. We need to consider whether it is sensible just to introduce representative actions for discrimination cases or whether that overlap will cause greater confusion and delay. The Ministry of Justice is doing further work with the Civil Procedure Rule Committee and is trying to develop a toolkit, so that Departments can look at the issues and decide, Department by Department, whether it would be good for access to justice in their areas.
We recognise that pay discrimination is systemic. We recognise too that there are situations where a number of individuals will want to bring broadly similar claims against a single party. We know that introducing representative actions could bring benefits for individuals, and potentially also for defendants faced with multiple claims. We will look at the issue, and we may well consult in due course. In the meantime, on the understanding that we are researching the issue as far as we can, I invite hon. Members not to press new clause 4.
As for hypothetical comparators, I think that there has been a slight mix-up on the clause numbering, as clause 64 is now the relevant one, although that does not particularly matter. The clauses reflect our decision to keep the distinction between contractual and non-contractual pay matters for work-related gender discrimination, which means that someone has to identify a comparator of the opposite sex to make an equal pay claim. That has to be a real person.
We are firmly of the view that accepting new clause 5 would lead to difficult consequences, some of them probably not only unintended but unforeseen. We are obviously determined to expose and address unequal pay; I hope that that can be taken as read. The way to
do that, however, is not to increase confusion about how comparisons can be made, but to increase transparency. The tribunal would be asked to conclude from the fact that there is a difference in pay between two people doing work that is not of the same value, that that somehow indicates that two such people doing the same work would be paid differently. In the absence of evidence of direct discrimination, for which we have made new provision in clause 68, we do not see how that conclusion can be reached. Clause 68 does, however, allow claims where there is evidence of direct discrimination in relation to contractual pay, so that is a little gap that we have filled, moving in the direction of the amending provisions.
There are contrary views on this issue: most of the respondents to our Green Paper supported our position that we should keep the current approach, although the Fawcett Society and the Women's National Commission did not agree. The consequences of allowing a hypothetical comparator could include, for instance, enabling a man in a lower-paid job to seek to equalise his pay with that of another man in a higher-paid job that he asserts is of equal value. A male care assistant could cite a hypothetical female refuse collector as a comparator of work of equal value in order to bring his wages up to the same level as refuse collectors who are male. That is not what the equal pay provisions are for, as they are intended to tackle discrimination between men and women rather than be a mechanism for fair pay-there are different mechanisms for that. Permitting reliance on a hypothetical comparator would encourage that sort of claim and might well bog down tribunals even more; it would take the legislation way out of the territory that it is intended to cover.
David Howarth: The theoretical possibility that the hon. and learned Lady just mentioned exists for all other terms and conditions of employment, but not for those connected with pay. Why, then, does she adopt this position, which seems to me inconsistent with what everyone agrees works well in the rest of discrimination law?
The Solicitor-General: We have said many times why we think that the unintended consequences are much more far-reaching in the pay sector than they are elsewhere. That is why we have always drawn back from allowing hypothetical comparators. They are not essentially a tool of the mission on which we are embarked; they would send it into very diverse courses, which is not our target.
Let me mention a fairly recent case. People worry especially about women involved in contracting out-where, for example, a local authority's cleaning is contracted out-because they are left without a remedy in that they no longer have a male comparator. They are the cleaners, they are ghettoised and they are women, so they no longer have a male comparator doing equal work. The thrust of the argument for hypothetical comparators seems to be that they would address that problem.
The hon. Member for Cambridge (David Howarth), who is a smart lawyer, will know that the Court of Appeal in the case of Guttridge v . Sodexo has shown that a right to equal pay under an equality clause is protected following a TUPE transfer, and that employees will be able to enforce that claim against their new employer. Since that was the height of the argument in favour, and given that we do not agree with it because of
the possible unintended consequences, I hope that people are none the less reassured that some of the teeth have been drawn.
Jeremy Corbyn: The Minister makes a point about employees transferred with TUPE protection, but the problem often arises that groups of workers that have been transferred with that protection are joined by new recruits who do not have the same protection, leading to the inbuilt problem of a disparity between conditions, and sometimes the introduction of discrimination after the TUPE protection has expired.
The Solicitor-General: The usefulness of the case-although it does not extend to the circumstances envisaged by my hon. Friend-lies in the fact that as long as an action is brought within the six-months following the separation of a local authority, for instance, from its employees, equal pay can be guaranteed for all who have been transferred. As for the future and other aspects of fair pay, they are really outside the ambit of the Bill. We ought to seek other mechanisms to ensure that pay is fair. In this instance, we are discussing equality of pay between men and women, and other members with protected characteristics.
I must say, with huge respect to my hon. Friend, that although we all mean well and want to ensure that people receive fair pay, he has, in a sense, helped my argument that it is possible to take hypothetical comparators too far and end up a long way away from the issue with which we are dealing. I do not suggest for a moment that there are not other ways in which we must tackle low pay-there certainly are, and we have used them repeatedly-but hypothetical comparators are not the crux.
New clause 6 and amendments 1 and 68 concern the material factor defence. It was at this point that the numbering of the clauses was a bit adrift. The new clause and amendment 1 replace clause 66, which provides a defence of "a material factor" to a claim under an equality clause, with an alternative wording intended to achieve an effect similar to that of clause 66. We debated this subject in Committee. We cannot accept the amendment today, but we are considering the issue that was raised by the hon. Member for Oxford, West and Abingdon (Dr. Harris) in Committee, and we think that there will be an opportunity to bring about some movement on it in another place.
Clause 66 is intended to replicate the effect of the current law, which says that a material factor that is directly discriminatory simply fails, and one that is indirectly discriminatory must be justified objectively in order to succeed. That is the policy intention behind the amendment, and it is ours as well.
Concessions by the Government have become so rare that they ought to be noted in interventions. I am grateful to the Solicitor-General for saying that she will reflect on the material factor defence. It would be good to hear that at any stage in the Bill's passage. I
recognise that it will have to be dealt with in another place rather than on Report, but it would be churlish to let it go unremarked on, and we are grateful.
The Solicitor-General: I am grateful for the hon. Gentleman's gratitude. The question of phraseology remains, and I do not think that we are going to accept his phraseology, but if he agrees not to press his amendment, we will reflect and see whether we can reach some understanding.
Amendment 68 relates to the long-term objective of reducing inequality between the terms of men and women, which should always be regarded as a legitimate aim. Removing pay inequality between men and women is the main goal of some parts of the Bill. However, we do not underestimate the challenges faced by employers dealing with the legacy of pay inequality. Reviews of pay structures such as those that take place now, and will take place more fully following the enactment of the Bill, and restructuring of businesses and new ways of doing work can result in pay discrepancies.
Clause 66 is intended to encourage employers, employees and their unions to identify and resolve pay inequality by negotiation, which is much better than litigation. Its purpose is to put the legitimacy of that goal beyond doubt. It does not provide an easy get-out for employers, and it will not reduce protection for women. An employer who relies on this factor must always show that the means used are proportionate. However, it is important to make it clear that the best way to achieve the long-term objective of removing inequality is negotiation in circumstances that might otherwise involve real difficulties in relation to pay discrimination.
I shall now turn to new clauses 11, 21 and 22. The hon. Member for Hornsey and Wood Green and I both said we would revisit the issue in question on Report, and we have done so. It is about the CV survey, which I think I first disclosed in Committee, on how recruitment is conducted. The report following this survey was published in October and it confirms that there is undoubtedly race discrimination in the recruitment process. The report showed that whereas a white applicant had to send an average of nine applications before getting a favourable response-an invitation to have an interview or a telephone call to encourage them-an ethnic minority applicant had to send 16 applications. What to do about the report's findings should be decided by the body that started the ball rolling in the first place: the Ethnic Minority Employment Task Force. It should have met to talk about that last month, in which case I would have told Members what it had discussed. It was unable to meet owing to unforeseen circumstances, but it will meet in the new year.