Equal pay claims will come into a new focus following the new statutory code of practice on Pay Inequality launched in March 2022 to help eliminate pay inequality in Ireland, and the pressure on public sector pay due to the cost of living. April also saw the publication of the case of Reid v Teagasc ADJ-00028084, where the respondent was ordered to pay compensation to the Complainant in the amount of €40,000 in an equal pay case AND the Adjudication Officer also ordered the Head of HR to apologise to the Complainant for the department’s “very inept performance” in their handling of the matter. December this year will see the publication of the gender pay gaps in our public sector organisations and our larger private sector employers.
Mounting or defending a large equal pay case across a sector of the workforce can lead to important strategic decisions and raise a number of questions. For example:
- Which factors in a gender pay gap exercise might give rise to equal pay concerns?
- What data does the employee need to bring home a claim?
- What team does the employer need to assemble to defend a claim?
- How can they work with their lawyers, statisticians and accountants to counter sector averaging and pay averages?
- How can this be done with existing GDPR constraints?
Clíona Kimber SC, explains the very real issues around equal pay challenges by reference to the Code and how, combined with gender pay gap reporting, there will be a new spotlight on equality of pay between men and women in Ireland.
1. Factors in the new legislation: the Gender Pay Gap Information Act 2021 and the 2022 Regulations
The Gender Pay Gap Information Act 2021 amended the Employment Equality Act 1998 (mainly by inserting a new section 20), empowering the Minister for Children, Equality, Disability, Integration and Youth to make regulations requiring employers to publish gender pay gap information for their employees and such other additional parameters which the Minister may direct.
The Gender Pay Gap Information Regulations 2022 were published in June 2022. They provide the detailed framework for employers to calculate the gap in pay between males and females and to publish reports outlining specified information about the gender pay gap (GPG) and set out in detail how employers are to calculate the required statistics.
Who falls under the legislation?
- Employers with 250 or more employees are the first to come within the scope of the Act; employers with less than 250 employees will be included from the second anniversary of the regulations; and employers with less than 150 employees from the third anniversary.
- No requirement for employers with less than 50 employees to report.
- All public sector bodies are included, as well as bodies wholly or partly funded out of moneys provided by the Oireachtas, local authorities, the HSE, and schools and education and training boards in respect of which a public service pension scheme exists.
What information must be made available?
- The mean and median gap in hourly pay between men and women;
- The mean and median gap in bonus pay between men and women;
- The mean and median gap in hourly pay of part-time male and female employees;
- The percentage of men and of women who received bonus pay;
- The percentage of men and of women who received benefits in kind.
Insofar as there are gaps in pay, employers must publish a statement setting out the reasons for those differences in the employer’s case and the measures (if any) that the employer is taking to eliminate or reduce the gender pay gap.
How might the Act and Regulations be relevant in equal pay claims?
Two new sections inserted into the Employment Equality Act 1998 to support enforcement: s.85B will allow application to the Circuit Court or High Court in case of failure to comply with regulations made under s.20A by the Irish Human Rights and Equality Commission and s.85C allows a complaint by an employee to the WRC that their employer has failed to comply with s.20A. However, as the only remedy will be an order requiring the employer to comply, and no compensation may be awarded, it is difficult to see this as a standalone action. Rather, it may be used by an employee as a form of discovery. In this respect, timing of an information request and substantive complaint may need to be carefully choreographed.
Factors which may give rise to concern
The requirements to gather data on equal pay, calculate any gap and publish the results, will put a new spotlight on equal pay in a workforce. Factors such as discrepancies, inequalities or perceived inequalities will cause concern among the workforces. Employees may be prompted to take action.
If the exercise is not done at all, the employee may feel the employer has something to hide.
Differences across grades, and types of grades, may also lead to challenges as to the relevant scale an employee is on.
Ultimately, the deterrent effect on pay inequality of published pay gaps cannot be underestimated.
2. What data does the employee need to bring home a claim
The initial burden of proof is on the employee to establish a prima facie case. To do this, the employee needs to identify a comparator of the opposite gender who is doing the same work and who is being paid less than them. The employer is then required to justify the difference in pay on the basis of factors unrelated to the sex of the worker.
Clearly, information is king. Since discovery is not available before the WRC – although there is a power to request that information be disclosed to the WRC – there are two tools which might be deployed.
Data Subject Access Requests
- Article 15, Recitals 63 & 64 GDPR
- Under Article 12(5) GDPR, in limited circumstances, where an access request is ‘manifestly unfounded or excessive’, a controller may also, where appropriate, refuse to act on the request
- high threshold to meet, and the controller must be able to prove that the request was manifestly unfounded or excessive, in particular taking into account whether the request is repetitive. There should be very few cases where a controller can justify a refusal of a request on this basis.
- The GDPR (in Article 15(4)) states that the right to obtain a copy of your personal data should not ‘adversely affect the rights or freedoms of others’ – may cause problems re seeking comparator information.
There is very helpful guidance on the website of the Office of the Data Protection Commissioner as to making and complying with data subject access requests.
Freedom of Information Requests
An employee working in the public sector, may also have the ability to make a freedom of information request. This facility only applies to bodies that conform to the definition in section 6(1) of the Freedom of Information Act 2014 are subject to FOI:
- (1) Subject to this section, each of the following shall be a public body for the purposes of this Act:
(a) a Department of State;
(b) an entity established by or under any enactment (other than the Companies Acts);
(c) any other entity established (other than under the Companies Acts) or appointed by the Government or a Minister of the Government, including an entity established (other than under the Companies Acts) by a Minister of the Government under any scheme;
(d) a company (within the meaning of the Companies Acts) a majority of the shares in which are held by or on behalf of a Minister of the Government;
(e) a subsidiary (within the meaning of the Companies Acts) of a company to which paragraph (d) relates;
(f) an entity (other than a subsidiary to which paragraph (e) relates) that is directly or indirectly controlled by an entity to which paragraph (b), (c), (d) or (e) relates;
(g) a higher education institution in receipt of public funding;
(h) notwithstanding the repeal of the Act of 1997 by section 5, and subject to this Act, any entity that was a public body (including bodies or elements of bodies prescribed as such) within the meaning of the Act of 1997 on the enactment of this Act.
The FOI Act also provides, at section 7, for the extension of FOI to non-public bodies which are significantly funded by the State. Any such bodies that were subject to FOI under the 1997 Act will remain subject to FOI under the 2014 Act. The Minister may, by order, provide for FOI to apply to other non-public bodies which are significantly funded by the State in due course.
Circuit Court Discovery
Gender discrimination cases can be brought direct to the Circuit Court, as opposed to the WRC. The Circuit Court has unlimited jurisdiction in this type of case. Discovery is available in the Circuit Court, and an employee might be able to seek pay information by way of a request for discovery from the employer. It is likely that there would need to be some basis for the claim to be successful in obtaining discovery.
3. What team does the employer need to assemble to defend a claim?
If faced with an equal pay claim, an employer may need to add statisticians and accountants to the team to defend the claim. Larger organisations may want to create a team that includes people with knowledge of the organisation’s payroll and HR systems, and someone with an understanding of statistics, as well as an expert in equality law. This is particularly so if the pay across a grade or sector is challenged, or there are pay discrepancies across time windows.
The employee is likely to focus on a comparator of a different sex which they complain is paid more than they are for the same, or like work. The employer may need to justify this on the basis that the pay is linked to that grade, or that level rather than the sex of the worker. This may require statistics for the average pay across the sector, or statistics as to the number of overall males and females in the complainant pay grade and comparator pay grade. There may potentially be other factors which justify a difference in pay, which might only be revealed by statisticians, for example, agreed bonuses in a particular location due to a local agreement, allowances, night pay, after hours, additional bank holidays worked and so on. Pay could be impacted by allowances for degrees obtained or reduced if training has been paid for in a particular area.
Accountants may be needed to quantify the value of a claim, or the overall value of particular pay elements, or the value of changes over time, as it may be possible to defend a claim by showing that pay has not been unequal in fact, although it might appear to be.
A gender pay gap could also reflect how the gap is calculated. There are organisations where more women than men have opted to pay their pension contributions under salary sacrifice arrangements, and this has widened the pay gap figures.
Multinationals: A multinational with 250 or more relevant employees working wholly or mainly in Ireland must report on its gender pay gap. The regulations are not clear about group reporting. At present they require each company, that is, each legal entity within a group, to report on its own gender pay gap; if a subsidiary has fewer than 250 employees, it does not have to report. As each legal entity within a group will vary in size, it will sometimes happen that not all companies within the group meet the 250 or more threshold. At present, the position is not clear as to whether a company and its subsidiaries are to be amalgamated for the purpose of creating an obligation to report. This also means, on the defence side, that if there is any challenge to pay statistics, that the company may be better minded to consider its reporting unit.
One public service decision reveals how the statistical bigger picture is required to defend.
Tomás Horgan and Claire Keegan v Minister for Education & Skills and Others (C-154/18) ECLI:EU:C:2019:113.
- The case concerned primary school teachers in state-paid positions.
- To achieve a medium-term structural reduction in the cost of the public service, the Irish government changed the salary arrangements by which newly recruited public servants, including teachers in national schools, were recruited, offering lower pay to new recruits than teachers already employed before a specified date, irrespective of age.
- Young teachers made a complaint about equal pay by reference to a comparator of an older teacher doing the same work. There was a difference in pay.
- The CJEU considered whether there could be discrimination at all. It observed that the difference in salary treatment resulted from the date of recruitment. When a person was recruited was the only relevant criterion, which applied regardless of age at the time of recruitment.
- CJEU held that this did not constitute indirect age discrimination as “The date of recruitment is at first sight a neutral criterion from the age perspective.”
- The Court concluded: “that criterion, which renders the application of the new rules dependent exclusively on the date of recruitment as an objective and neutral factor, is manifestly unconnected to any taking into account of the age of the persons recruited … the new remuneration conditions introduced by Ireland are not based on a criterion which is inextricably or indirectly linked to the age of the teachers, so that it cannot be considered that the new rules establish a difference of treatment on grounds of age”.
4. GDPR constraints
Clearly data on employees work and pay is collected for the purpose of paying the employees for work done. If the data is used to defend litigation, this will have to be justified under GDPR. Therefore, an employer will be required to find a valid reason for the processing and to put any safeguards in place.
A justification can be found in Data Protection Act 2018. Section 41 of that Act (“Processing for purpose other than purpose for which data collected”) states:
“Without prejudice to the processing of personal data for a purpose other than the purpose for which the data has been collected which is lawful under the Data Protection Regulation, the processing of personal data and special categories of personal data for a purpose other than the purpose for which the data has been collected shall be lawful to the extent that such processing is necessary and proportionate for the purposes…
(c) set out at paragraphs (a) and (b) of section 47;”
The relevant portions of Section 47 read:
“(a) is necessary for the purposes of providing or obtaining legal advice or for the purposes of, or in connection with, legal claims, prospective legal claims, legal proceedings or prospective legal proceedings, or
(b) is otherwise necessary for the purposes of establishing, exercising or defending legal rights.”
Nevertheless, as such processing is an exception to the general prohibition on processing data beyond its original purpose, Article 6(4) GDPR, – which applies to processing data for a purpose other than that for which it was collected – may come into play.
This section is likely to apply since the purpose of the original collection of the information was likely to have been under Article 6(1)(a) (the data subject consented to the processing for specific purposes) and/or (b) (the processing is necessary for the performance of a contract to which the data subject is party), Article 6(4) GDPR provides:
“Where the processing for a purpose other than that for which the personal data have been collected is not based on the data subject’s consent or on a Union or Member State law which constitutes a necessary and proportionate measure in a democratic society to safeguard the objectives referred to in Article 23(1), the controller shall, in order to ascertain whether processing for another purpose is compatible with the purpose for which the personal data are initially collected, take into account, inter alia:
- any link between the purposes for which the personal data have been collected and the purposes of the intended further processing.
- the context in which the personal data have been collected, in particular regarding the relationship between data subjects and the controller.
- the nature of the personal data, in particular whether special categories of personal data are processed, pursuant to Article 9, or whether personal data related to criminal convictions and offences are processed, pursuant to Article 10;
- the possible consequences of the intended further processing for data subjects.
- the existence of appropriate safeguards, which may include encryption or pseudonymisation.”
The employer using employee data such as pay level, age, educational achievements or qualifications, location of work, part-time or full time, or any other factors, will need to make sure that the safeguards are put in place.
If an employer works across a company structure, where the paymaster and employer are split, as can happen in the public sector, or where there are co-respondents, there may be further difficulties in using and sharing information between co-respondents or parts of a company.
5. What type of redress is needed when there are arrears of pay
What are the implications of the various options available to the parties when dealing with an award or negotiating a settlement agreement?
Its important to remember first that the WRC or Labour Court can award the following:
|(a) an order for compensation in the form of arrears of remuneration (attributable to a failure to provide equal remuneration) in respect of so much of the period of employment as begins not more than 3 years before the date of the referral|
|(b) an order for equal remuneration going forward|
|(c) an order for compensation for the effects of acts of discrimination or victimisation which occurred not earlier than 6 years before the date of the referral of the case|
|(d) an order for equal treatment in whatever respect is relevant to the case;|
|(e) an order that a person or persons specified in the order take a course of action which is so specified.|
These are a wide range of orders, and mean that the WRC or Labour Court has a wide menu to choose from. They could also override any financial limits by making an order for equal treatment in ‘whatever respect is relevant.’
Points to consider include:
- The financial implications (particularly with regards to tax) of framing a plaintiff’s claim as a claim for back pay as opposed to a lump sum; [compensation for discrimination under 82(c) is limited to 2 years salary, but would not be subject to tax if it is compensation for effects of discrimination).
- For defendants, the greater immediate financial impact of a lump sum payment as opposed to the longer-term implications of a regrading or increase in pay for the future, which includes consideration of benefits and pensions.
- Arrears of pension – an employee will be required to make up any employee contributions, if these were required by an employer scheme. These need to be calculated.
- The range of orders which may be “on the table” if a claim is heard.
Conclusion- Take Aways
Strategy is important in dealing with equal pay claims. A complainant or a defendant must start with the end in mind and must have a clear road map as to how to get there.
Litigants must consider the use of data access tools, and the type of factual evidence they will need to assemble to create a prima facie case. Employers will have to consider at the outset what team they will need to assemble to defend the claim, and to analyse up front the substance of the claim from a statistical as well as legal perspective.
A good strategic defence at an early stage may encourage a litigant to withdraw the claim. Obtaining and analysing the data and how it relates to law may reveal that there is a difficulty with the defence, and thus lead to a more cost-effective early settlement, saving legal costs.