25 October 2012 | By Sam Chadderton
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A Supreme Court ruling on equal pay has generated huge debate among employment lawyers.
Leigh Day & Co partner Chris Benson, and Outer Temple barristers Andrew Short QC and Naomi Ling, secured a victory for 174 former employees of Birmingham City Council against the authority, which was represented by Cloisters employment silk Paul Epstein QC, Nathaniel Caiden from the same set and Old Square’s Louise Chudleigh (24 October 2012).
The judgment has the effect of extending the limitation period on bringing equal pay claims from six months to six years by allowing cases to be brought through the High Court rather than just the Employment Tribunal (ET).
Madeleine Thomson, head of employment at Hamlins, said it gives employees a real choice as to their access to justice, especially on the issue of costs, which she said can be tens of thousands of pounds and difficult to recover in the ET.
“Sometimes employees don’t realise that they’ve been victims of unequal pay until some time after their employment has ended, particularly so where the unequal pay in employment has led to poorer pension scheme contributions,” she said.
Mishcon de Reya employment partner Greg Campbell labelled the judgment an “incremental step for employment law” and said it may still take another 30 to 40 years for gender pay equality to be achieved organically, rather than through litigation.
Campbell said: “It’s probable the number of cases will now rise as people become more aware of the opportunities to claim compensation, although such claims will be riskier for employees as in the High Court, if they lose the case, they’ll be liable to contribute towards the employer’s legal fees.”
However, Ashurst head of employment Caroline Carter predicted a dramatic increase in public and private sector claims with a “significant” financial impact on employers.
She said: “The decision raises significant concerns for employers and goes to the heart of their risk management strategies and budgets for equal pay claims.
“Employees now have much longer to bring their claim and it opens the floodgates for opportunistic employees to ‘forum shop’.
“Successful claimants are entitled to equalise pay going forward as well as arrears for equal pay of up to six years. This is a powerful tool for all levels of employee, especially in the public sector, where class action claims are common. The stakes for employers have just got higher.”
Sarah Ozanne, employment partner at CMS Cameron McKenna, agreed that the judgment has “serious ramifications” for employers.
But she added: “Although a positive move for ex-employees in terms of recourse, the law on equal pay still lags behind other discrimination laws in terms of preventing such issues in the first place.
“The Government changed initial proposals under the Equality Act to introduce compulsory pay audits, which it is proposed will now only be the case if the employer is the subject of a successful claim.”
Irwin Mitchell employment partner Glenn Hayes questioned the consensus that the Supreme Court ruling will lead to a rush of new claims.
He said: “It’s unlikely that many people will have been put off bringing such a claim, or prevented from doing so, by the six-month time limit. However, that’s not to say that there may be some cases which haven’t been advanced which now are able to do so.
“Whether equal pay claims are brought at all is likely to be determined by whether claimants can obtain funding and legal help via their union membership or elsewhere. It must also be remembered that due to the funding likely to be available and costs consequences that can result from bringing claims in the civil courts, only cases deemed strong enough in the eyes of the legal adviser are likely to be taken on.”
Hogan Lovells senior associate Vanessa Hogan suggested that employers who have lost ET equal pay claims in the past may now face further litigation form ex-employees who were not involved in the original claim because of the six-month limitation. Hogan said reviews of historic workforces would need to be carried out.
She added: “Even with this win, the ex-employers [in the case] still have to make out their case for equal pay. A further costly battle for both parties is still to be fought.”