The rise of equal pay claims: Challenges and solutions for employers

In recent years, the issue of equal pay has gained significant attention, leading to a surge in equal pay claims in the private sector. As a result, many employers are concerned that they could fall foul of what is a complex legal area.

The rise of equal pay claims: challenges and solutions for employers

In recent years, the issue of equal pay has gained significant attention, leading to a surge in claims in the private sector. As a result, many employers are concerned that they could fall foul of what is a complex legal area.

While the principle that men and women are paid equally for performing equal work is surely right, the law that governs equal pay litigation is very technical. Typically, there are three key stages to an equal pay claim: identifying who is the correct comparator with whom to compare the claimant’s treatment, deciding whether the roles which the comparator and the claimant performed are the same, rated as equivalent or of equal value and, if so, moving on to consider whether there is a material factor which explains the difference in pay which is unconnected to gender. Only if the comparator performs the same, equivalent or work of equal value and there is no material factor to explain the difference in pay will a claimant succeed in their equal pay claim.

Current private sector litigation

Several major retailers in the UK are currently facing equal pay claims. This has seen female store workers argue that their jobs are of equal value when compared to male colleagues working in distribution centres.

Most recently, in the Asda equal pay claim, the tribunal compared 14 shopfloor roles to 17 comparator roles in warehouses and found that 12 of the shopfloor roles were of equal value to the warehouse roles. As a result, it is now for Asda to try to establish there is a material factor for the pay difference which is not based on gender. A failure to do so would reportedly result in individual claims worth around £20,000.

Challenges for employers in defending equal pay claims

Defending equal pay claims can be costly and time-consuming for employers. It is not surprising, therefore, that in our recent Litigation Risk 2025 report, 70% of respondents said that equal pay disputes were the greatest risk of employment related litigation that their organisation would face in the next 12 months. Key challenges for employers include:

1. complexity of equal value assessments: determining whether different roles are of equal value involves assessing factors such as effort, skill, and decision-making. This often requires the appointment of an expert to assist in the evaluation.
2. job evaluation studies: while job evaluation studies can provide a defence in equal pay claims, they must be non-discriminatory and regularly updated to reflect any changes in job roles.
3. legal and financial costs: the legal and financial costs associated with defending equal pay claims can be substantial. Employers may need to invest significant resources in legal representation and expert evaluations.

Positive steps employers can take to reduce the risk of equal pay claims

To mitigate the risk of equal pay claims, employers can take several proactive steps:

1. implement equal pay policies: employers should implement and promote equal pay policies that ensure men and women are paid equally for performing the same work or work of equal value. This can help attract and retain talent as well as improve relationships with customers and suppliers.
2. conduct regular pay audits: regularly conducting equal pay audits can help identify and address any pay disparities within the organisation. Employers should also analyse their gender pay gap reports and take action to address any issues identified.
3. job evaluation schemes: implementing non-discriminatory job evaluation schemes can help ensure that jobs are rated accurately based on their value. This can provide a defence in equal pay claims and help maintain pay equity but these will need to be kept under regular review as roles evolve and change over time.
4. training and awareness: providing training for HR professionals and recruiting managers on equal pay and gender equality can help raise awareness and prevent pay disparities.
5. transparent pay practices: employers should ensure that their pay practices are transparent and based on objective criteria. This can help prevent pay disparities and build trust among employees.

By taking these steps, employers can reduce the risk of equal pay claims and create a fair and inclusive workplace. The rise of equal pay claims serves as a reminder of the importance of pay equity and the need for proactive measures to address pay disparities.