The newspapers have finally woken up to the impact of the equal pay claims on public sector organisations.
Most local authorities have known for years that they are potentially at risk from equal pay claims but hoped to gradually close the gap by giving higher pay rises to groups of predominantly female workers.
Unfortunately, their plans were blown apart by an EU ruling and the Freedom of Information Act. The EU raised the cap on back pay in equal pay claims from two years to six. This meant that the amounts to be gained from bringing such a claim would now be significantly higher. Clever lawyers realised that they could use the Freedom of Information Act to force local authorities and NHS trusts to reveal information about salaries, job evaluation and gender profiles. By analysing this data, the lawyers could see where employers were at risk from an equal pay claim and offer to take the employees’ case on a no-win no-fee basis. As they had already seen the pay data, the lawyers were sure that the cases would be successful, so their risk was minimal.
Consequently, councils and NHS trusts have been hit by a wave of equal pay claims in which they have been forced to raise some workers’ salaries and give them six years back pay. This has blown their salary budgets and left existing union-negotiated pay deals in ruins. Some authorities are even borrowing money to cover the costs.
However, instead of levelling up, some authorities have suggested levelling down; cutting the pay of the higher paid groups to match that of the lower paid. This would mean pay cuts, mostly affecting male employees.
This is the bit I just don’t buy. Pay cuts? This is the public sector, for God’s sake! No-one has their pay cut in the public sector. Local authorities and NHS trusts are full of former senior managers whose jobs disappeared in reorganisations, doing jobs at a lower grade but still receiving the same salary and benefits.
The only way pay cuts could be enforced would be by making people redundant, which would involve large severance payments, then offering them their jobs back at a reduced pay rate. Given that the labour market is fairly buoyant in most areas, many council workers might just take the money and run. Some might even walk into jobs with neighbouring councils the next day. Organisations adopting this strategy might find themselves with no staff at all.
No, I just don’t believe that this will ever happen. A more probable scenario is that the equal pay claims will continue, the employees will win most of them and NHS trusts and local councils will find themselves in a race to raise the pay of workers like care assistants to pre-empt any further legal action. The pay bills will rise and the government will be forced to meet the cost from national and local taxes.
And Stefan Cross will probably be getting a shiny new car.