• Insights

Equal pay and the courts

Global
19.09.22
7
Although progress is being made on tackling the gender pay gap, it is still an issue in lots of countries. We wondered how the courts in various countries deal with claims of a gap between the pay of men and women for equal work.

In this survey of 17 of our Ius Laboris law firms, we discuss the notion of equal pay, but note that this is not the same as the fairness or unfairness of the pay people receive. A company may, for instance, offer salaries to a group of people that are above or below the market rate. The issue we focus on here is whether women in that group may be paid less than men, simply because they are women and not for any rational, defensible reason to do with the job itself.

Most countries have some law or regulation on equal pay (Singapore being the exception, although it does have guidelines on rewarding employees fairly) and a lot has already been written on these initiatives, aiming at combating the wage gap. However, there have been hardly any studies of court decisions or settlements on equal pay, to our knowledge. To try to fill this gap, we have been working on an overview of how the laws on equal pay are being treated by the courts, the issues most often raised during court proceedings and the difficulties faced by both workers and employers in defending their claims. There are few general rules that apply to all countries, but we have found that a number of concepts are interpreted in a similar way in a range of countries.

The first thing worth noticing is that the number of cases on gender pay is very low. This could be because employers in the private sector are often not transparent about their pay policy – nor are they obliged to be transparent. This means that women may simply not realise that they are being paid less than their male colleagues. In continental Europe for example, employees seldom discuss their pay. The UK is an exception, as the courts there regularly rule on pay gap disputes. And many class actions against employers in the UK public sector seem have paved the way for increasing numbers of disputes in the private sector.

Our data shows that in the majority of countries, claims have to be brought by employees – and third parties (organisations with legitimate interests etc.) are unable to bring actions before the courts. However, some countries allow claimants to be financially assisted by third parties during the process.

All the countries we surveyed offer an option to settle claims. This can enable employees to avoid the cost and stress of a court process and employers to avoid possible adverse publicity.

In terms of what pay means, the majority of the countries we looked at interpret this widely, including, not only base salary but also allowances, bonuses, contractual benefits, pension benefits, etc.

One of the core issues in gender-related pay discrimination cases is whether the complainant can establish that she performed equal work or work of equal value when contrasted with a ‘comparator’ person or group of persons. The elements mostly used to determine if work is equal or of equal value are: the qualifications needed to do the job, the work schedule, efficiency, workload and the level of responsibility involved. This means the focus is on the actual work done, including its quality, content and the conditions under which it is carried out. It is very clear from the case law that the actual job title matters little.

In terms of finding a reliable comparator, there is no single interpretation as to who can be suitable. Spain uses tool to try and calculate a score for each job in a company, based on the skills needed to do it, the physical and mental requirements, responsibilities, level of independence of the jobholder, etc. This enables it to identify jobs of equal value. But each national court seems to have its own view about comparators. In most cases, a predecessor is acceptable, for instance, but it’s not clear whether a successor would work.

Another question is whether the comparator has to work for the same company and most case law seems to be in favour of this, but even for employees in the same company, there may be questions about whether people from different locations or under different terms and conditions would do. In the UK in a landmark case relating to gender pay in supermarkets, comparisons were successfully made between those working on the shop floor (mostly female) and those working in the distribution centres (mostly male).

In most countries, the burden of proof (the obligation to prove the case to the court) either lies with the person making the claim (the claimant) or is split between claimant and employer. The question of who needs to prove the case can make a big difference to the outcome. Often, employees will not have access to a great deal of company information, for example, thus making it harder to prove fault. In Italy, it is worth saying, the employee is only required to show a presumption of fault by the employer, which the employer then has to ‘rebut’ and in Romania the burden of proof lies with the employer alone.

The majority of countries have no mechanisms to help determine whether equal pay is being respected. In other words, having put equal pay laws in place, most countries have no way of knowing how far the law is being followed in practice. In Austria, Belgium, Germany Italy, Spain and the UK there is a reporting mechanism. However, the issue with these mechanisms is that they often look at the pay gap between male and female workers for an entire company, rather than comparing people with similar roles. In other words, if in a company, most of the senior roles are taken by men and the junior and support roles (secretaries, for example) are taken by women, the pay gap will be very large, but some argue this is justified by the different level of responsibility the senior roles involve. (However, it’s worth noting that the reason the women may find themselves unable to progress beyond those junior roles may because of bias, not of pay per se, but of an equally pernicious and discriminatory kind that also needs to be addressed).

In Austria, Belgium, Germany, Italy and Spain the reporting mechanisms are more granular and avoid reporting only on the overall pay gap. But it is still not always easy to use the reports in court proceedings, for example, because there is limited access to the report or, indeed, no obligation for the employer a draft report. However in Italy, the situation may improve, with the advent of a new obligation on companies with over 50 employees to produce a regular report that is accessible to the unions and equality bodies.

In many places, the gender pay gap is very much a work in progress. For example, in Luxembourg there is a “Actions positives” initiative on equal pay, but it’s not mandatory. Poland also has an equal pay initiative, but this is not mandatory either. The Netherlands has been working on an initiative for several years, but it is not yet law.

When we take a closer look at how employers explain the differences in pay, the most commonly used grounds are: different qualifications, different role, different responsibilities, different working schedule, different level of seniority, different geographical location, etc. But is the person’s previous salary something that can be used to support current pay? In many countries, traditionally, it has been acceptable to ask a person what their previous salary was, but there is some concern doing that can simply embed a previous pay gap. It is therefore possible that this will change over time.

Analysing how much a victim is likely to get if they win their case gives mixed results. The general principle is that a successful claimant can expect some form of arrears (either full or partial) and equal pay in future. But in terms of the cost of taking the case to court, there is an even split between countries that offer some form of compensation to victims for this, and those that don’t. It is important for claimants to be aware of this before they embark on an action.

On whether the public prosecutor’s office or the labour inspectorate are involved in cases, in some countries, such as Belgium, Chile, Canada, Colombia, the Netherlands, Poland and Spain, the public prosecutor’s office and the labour inspectorate can be involved, whereas in Italy and Turkey they will only be involved if the discrimination also constitutes a criminal offence. In Austria, Germany and the UK, the public prosecutor’s office cannot be involved.

Insights

Generally, it appears that there is a reticence about addressing pay discrepancies in most of the countries we looked at and this may have the effect of deterring people from using the courts as the enforcement tool they are meant to be. One gap, for example, seems to be a basic gap in knowledge: people don’t tend to know how much others are paid. But all this means that drafting legislation is not enough to solve the problem – something legislators have surely been aware of for some time, given that most equal pay laws have been in place for decades, yet the pay gap persists.

A second gap is that between the law and the mechanisms available for enforcing it – an important element of which is the courts. Essentially, how can mechanisms such as the courts be made more accessible? How can going to court be turned into something less daunting and more realistic? And are there ways in which court processes can be improved once you get there? Our survey in no way purports to answer these questions, but simply raises them. One thing that gives us hope is the various pay gap reporting laws being put in place around the world. These will help with the initial knowledge gap about people’s pay and will ensure the pay gap is placed squarely in the public eye.

Take a look at our survey below.

Contributors

This report is based on information provided by Ius Laboris law firms in: Austria, Belgium, Canada, Chile, Colombia, Finland, Germany, India, Italy, Kazakhstan, Luxembourg, the Netherlands, Poland, Romania, Singapore, Turkey and the UK (not including Northern Ireland).

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