knowledge 13 April 2022 |

IHREC Publishes New Code of Practice Part 2: Equal Pay

In the first part of this article we reviewed the new Code of Practice on Sexual Harassment and Harassment, and in this second part we will consider the impact of the new Code of Practice on Equal Pay.

The Irish Human Rights and Equality Commission

Established in 2014 under the Irish Human Rights and Equality Commission Act 2014, the IHREC is Ireland’s national human rights and equality institution. The IHREC has the stated purpose of protecting and promoting human rights and equality in Ireland and building a culture of respect for human rights, equality and intercultural understanding in the State. Under the 2014 Act, the IHREC may draft codes of practice in furtherance of, amongst others, the elimination of discrimination and the promotion of equality of opportunity in employment.

Equal Pay Code of Practice 2022

The Code of Practice on Equal Pay 2022 is the first code to tackle the issue of equal pay and therefore represents an important milestone in employment equality in Ireland. The Code outlines its three main aims of providing employers, trade unions and employees with practical guidance on the right to equal pay, how to eliminate pay inequality, and how to resolve pay disputes.

Importantly, and like the Harassment Code mentioned above, the provisions of this code are admissible in evidence in proceedings before a court or before the Workplace Relations Commission or the Labour Court. Therefore, an employer who does not comply with the Code may fall foul of a discrimination claim as a consequence.

The Right to Equal Pay

The Code reminds employers that the right to equal pay means that a person who is performing work that is the same or similar or of equal value to another employee, who differs in respect of one of the nine protected grounds, has a right to be paid the same as that other. In essence, an employer may not pay a person lesser remuneration based on one of the nine protected grounds.

The Code clarifies that discrimination may be inferred where an employer has adopted a policy which is, on the surface, not discriminatory on any of the nine grounds but such a policy would have an adverse impact on a particular group or individual. For example, deciding to pay part-time workers a lower hourly rate than their full-time counterparts, as well as causing difficulties under part-time worker legislation, could have a discriminatory effect as persons with family responsibilities are more likely to work part-time.

Pay Review

The Code notes that the law does not require employers to carry out a pay review. However, it is reiterated that employers do have a minimum legal requirement of eliminating unlawful pay inequality and that a pay review, which encompasses a rational and objective job evaluation model,  is the most effective way of achieving pay equality.

This concept of a “pay review” should not be confused with the traditional understanding of the term, such as carrying out annual pay reviews with individual employees. Rather, the Code uses the term in the sense of investigating an employer’s pay practices with a view to making them fairer across the nine discrimination grounds.

In carrying out such a review, the Code notes that “joint management and employee participation at all stages of the review is desirable to ensure commitment to the process and positive outcomes”. The Code also provides extensive guidance on how employers can effectively carry out such a pay review process. including:

• Auditors: The employer should engage more than one person in the evaluation process as “[i]t is not desirable for one person to undertake the job evaluation regardless of how small the organisation is.” Helpfully, the Code makes it clear that an external consultant or expert can provide assistance.

• Collection of Data: The review process should include collection of data on the jobs that are to be examined. Such data can be obtained from a variety of sources, such as job descriptions, interviews, questionnaires, observation of the role, etc.

• Pay Data: The Code clarifies that all elements of pay are to be evaluated. This extends beyond basic pay to include discretionary payments, bonuses, allowances, company car, etc.

• Evaluating the Data: The pay review will require clear parameters on how the data will be evaluated and scored. The Code notes that “[a] weighting grid can be used to indicate the relative importance of each factor and sub-factor.”

• Pay Review: Once the data has been gathered and evaluated, the employer can then evaluate any pay differentials in roles that involve like work. The Code outlines that indicators of discrimination may include, for example, certain employees progressing more slowly than others or some employees being paid less than others when they perform like work and have similar experience.

Like Work & Comparators

The Code clarifies that in order to succeed in a complaint that one is not receiving equal pay then they must show that they are performing ‘like work’ with that of a chosen comparator, that they are receiving less pay than that comparator, and that the reason for the pay differential is one or more of the nine prohibited grounds. This means that it must be shown that they perform ‘like work’ which is taken to include:

• Performing the ‘same work’: that the work performed must be the same or interchangeable for the complainant and the comparator.

• Performing ‘similar work’: that differences between the work of the complainant and the comparator are insignificant in relation to the work, or so infrequent as not to be significant to the work as a whole. The Code cites the example of male and female general operatives on a factory floor operating the same machinery, but the male operatives occasionally lift heavy items.

• Performing work of ‘equal value’: this is where the work engaged in is equivalent in matters such as skill, physical and mental requirements, level of responsibility and working conditions. For example, in Doran & Ors v Minister for Finance & Ors [2001] a number of clerical assistants in the Irish civil service successfully claimed that their work was of equal value to that of paper keepers.

The Code makes it clear that a complainant must identify an actual named comparator for an equal pay claim to be successful and that a hypothetical or notional comparator will not suffice. Furthermore, there is a three-year time limit on the length of time for which like work can be compared for the purposes of an equal pay claim.

Resolution of an Equal Pay Dispute

Unlike the Harassment Code of Practice, the Equal Pay Code does not specify bespoke minimum procedural requirements for investigating an equal pay dispute. Rather, the Equal Pay Code outlines that an individual that believes they are not being paid equal pay should raise the matter informally with management through the internal grievance procedure in the first instance. If not resolved, the pay issue may then be pursued through internal formal grievance procedures. The Code goes on to note that should the individual not be satisfied with the outcome of this internal procedure they have the option of lodging a claim with the Workplace Relations Commission (or to the Circuit Court in a gender claim) under the Employment Equality Act 1998.

Right to Information

A central challenge traditionally faced by employees in grounding an equal pay claim is that they would often be unaware of what their comparators are earning and would be unable to obtain such information. The Code highlights that an individual does have a right under the 1998 Act to seek ‘material information’ from an employer, to include information on a comparator’s remuneration, in order to decide whether or not they can proceed with their claim. Whilst an employer is not obliged to provide that information, negative inferences may be drawn against the employer should they fail to do so or should they present the information in a false or misleading manner.

The Code has provided guidance, including template Questionnaire forms, that an employee may use in seeking such information from their employers.

Defences to an Equal Pay Claim

There are a number of defences recognised in the Code that an employer may avail of when faced with an equal pay complaint, namely:

• Establishing that the complainant and the comparator do not perform like work.

• The difference in pay can be explained by reasons wholly unconnected to the nine discrimination grounds.

• A policy which is deemed to be indirectly discriminatory may be defended by showing that there is objective justification for the negative impact on foot of a legitimate aim and showing that the means of achieving that aim are appropriate and necessary.

• Length of service may be raised as a defence, particularly where lengthier service is aligned with experience. However, the Code notes that this is not a blanket defence and discrimination may arise where the complainant adduces evidence which raises serious doubts as to the basis of such higher pay.

• The Code recognise that “market forces” may give rise to a defence where it is supported by reference to quantifiable evidence. Although the Code does not expand upon the meaning of “market forces”, traditionally this is taken to include situations like paying one group of workers more than another, even though their work is of equal value, because the ‘going rate’ for the job is higher. Another example might be a geographical distinction where hiring someone who resides in Dublin is more expensive due to increased competition in the market, or where there is a skills shortage in one job but not another.

Also contributed by Alan Hickey