Equal pay claims based on disability and ethnicity

The proposal to extend equal pay rights to ethnic minority and disabled workers was included in the King's Speech in July 2024 and will form part of the draft Equality (Race and Disability) Bill, which is expected to be published during the current Parliamentary session.

Under the Equality Act 2010, sex discrimination claims relating to contractual pay must be brought as equal pay claims, whereas someone who has experienced race or disability discrimination in relation to contractual pay must bring their claim as a direct or indirect discrimination claim. While thousands of equal pay claims are brought each year, there are far fewer claims for pay discrimination based on ethnicity or disability. The government considers that this could suggest that the equal pay regime offers a stronger form of redress, but seeks views on other possible reasons.

The existing equal pay regime involves complex rules of procedure, and the call for evidence acknowledges that simply extending it in its current form may not be the best approach. In particular, the government is considering whether the procedural rules of the existing regime and the use of job evaluation schemes might be simplified or adjusted to reflect new claim types.

Preventing the use of outsourcing as a means of avoiding equal pay

Currently, a claimant in an equal pay claim must have an actual (rather than a hypothetical) comparator, employed by the same or an associated employer. Outsourced workers are therefore unable to compare their pay with that of direct employees.

The government notes that there is evidence that outsourcing has given rise to inequalities, including the underpayment of outsourced staff. While acknowledging the need to avoid placing unreasonable expectations on employers, the government is seeking views on how to remove barriers and potentially enable comparisons between outsourced workers and direct employees in equal pay claims, as well as where liability for claims by outsourced workers should lie.

Enforcing the right to equal pay

The right to equal pay is primarily enforced by individuals bringing claims in the employment tribunal. The Equality and Human Rights Commission can also use its enforcement powers under the Equality Act, although such action has to-date been limited. The government is looking at ways to improve the enforcement of the right to equal pay, including via the establishment of a new Equal Pay Regulatory and Enforcement Unit, which would have trade union involvement and could provide legal advice, bring and intervene in legal proceedings, and facilitate informal dispute resolution.

The government is also seeking views on the effectiveness of the regulations that empower tribunals to order employers who are found to have committed an equal pay breach to conduct an equal pay audit.

Improving pay transparency

The government stated a commitment in its Plan to Make Work Pay to ending pay discrimination at work. It is therefore considering the introduction of new pay transparency measures such as providing salary ranges in job adverts, prohibiting employers from asking candidates about their salary history, and providing employees with information on pay, pay structures, criteria for progression and how their pay compares to others doing equivalent roles. Some of these proposed measures appear to be inspired by the provisions of the EU Pay Transparency Directive, which is not applicable in Great Britain but which EU member states must implement by June 2026. In view of the potential burden on employers, the call for evidence seeks views on whether such measures would be proportionate and effective.

Combined discrimination

Section 14 of the Equality Act – which has never been brought into force – prohibits direct discrimination on the ground of a combination of two protected characteristics, for example, where an employee is treated less favourably because of a combination of age and sex. The government has confirmed its intention to bring section 14 into force. The call for evidence asks whether combined discrimination might also be relevant to indirect discrimination and harassment claims, which suggests that the government might also seek to expand the scope of section 14.

Public Sector Equality Duty (PSED)

The PSED requires public authorities, and non-public bodies exercising public functions, to have due regard to the need to eliminate discrimination, advance equality of opportunity, and foster good relations between different people. The government is seeking evidence on the extent to which non-public bodies comply with the PSED when exercising public functions, and how greater compliance could be facilitated. 

Workplace harassment

The call for evidence refers to the proposal, in the Employment Rights Bill (ERB), to require employers to take all reasonable steps (as opposed to just reasonable steps) to prevent sexual harassment at work. The ERB also includes a power for the government to make regulations to specify steps that employers must take to prevent sexual harassment. However, the call for evidence notes that the government will only do this where it is proportionate and there is a clear evidence base supporting the efficacy of particular steps. The government is therefore seeking evidence of what steps have proved effective to reduce or eliminate workplace harassment, and how best practice may differ based on employer size, sector, or other factors.

The government is also seeking evidence on the potential implications of extending protection from sexual harassment to volunteers.

Socio-economic duty

Section 1 of the Equality Act imposes a socio-economic duty on public authorities, requiring them to consider how their strategic decisions could help reduce inequalities associated with socio-economic disadvantage. The socio-economic duty is currently in force in Scotland and Wales, but not in England. The government intends to bring the duty into force in England and is seeking views on how to make its implementation as effective as possible.

What does this mean for employers?

If implemented, the extension of the equal pay regime to cover claims based on disability and ethnicity, and to allow comparisons between outsourced workers and direct employees, would be significant. Equal pay claims are extremely complex, so it is encouraging that the government is seeking detailed evidence to help inform the drafting of new legislation in this area.

As noted above, a draft Equality (Race and Disability) Bill is expected during this Parliamentary session. However, it is still early days and any draft Bill would take some time to progress through parliament. We will continue to monitor and keep clients updated on developments in this area.

If you wish to contribute to the debate on the issues raised then please submit them to the Cabinet Office via the email link above, or if you wish to discuss the potential impact of the proposals further then please contact your usual DAC Beachcroft LLP contact.