The government has confirmed that it will ensure European Union (EU) derived protection under equal pay laws will remain in place for employees and workers. It is important to remember the assurances given previously, that leaving the EU would not have the effect of eroding employment rights.
This has come under scrutiny as a result of the Retained EU Law (Revocation and Reform) Act 2023, which received Royal Assent on 29 June 2023. It largely comes into effect on 31 December 2023 and gives ministers the power to change laws accumulated during the UK’s membership of the EU.
Significant protection against discrimination and pay inequality is provided by European law, including various directives and what was Article 119 of the Treaty of Rome, now Article 157. Moreover, there is a concept known as direct effect, being able to rely directly on that Article in a tribunal or domestic court, especially where the provision may give better rights than the Equality Act itself.
The UK’s equal pay laws allow a female employee to bring a claim where her male comparator, who she says is earning more, is in the same employment either with the same employer or an associated employer and at the same work location or establishment, or if the comparator works at a different establishment and common terms of employment are observed across the two locations.
EU law gives wider protection and would allow a claim if there is a single source which determines the employment terms, albeit the terms are not similar or common. The significance is illustrated by a European Court judgment in June 2023 (K and others v Tesco Stores), as the claimants and their male comparators worked at different workplaces, with the women in stores, their comparators at distribution centres. In addition, the two locations did not have common terms and conditions, and the Court of Justice of the European Union confirmed that Article 157 could be relied on and had direct effect, thus allowing a single source argument to proceed.
From an equal pay perspective, there was concern that these extended rights would be at risk of being lost or, at least, subject to significant legal challenge and debate. The government’s announcement confirms that the wider single source argument will remain, and specific regulations to implement the terms of Article 157 will be introduced.
Equal pay claims are notoriously difficult to pursue and defend, and expensive to lose. There is the potential for a tribunal to award up to six years back pay, plus interest; an award may also result in liabilities for pay-as-you-earn (PAYE) and pension benefits or pension loss. Reducing the protection would have been unwelcome when inequity in gender pay remains problematic but equally, avoiding legal arguments about single source and direct effect is helpful.
Audrey Williams is an employment partner at Keystone Law