The recent Birmingham Council equal pay case raises an interesting issue:  Under what circumstances is it correct to address a difference in “pay” between men and women using the equal pay legislation and when is this incorrect?  The simple answer is it depends on whether  the “pay” in question is contractual.

In the Birmingham case male workers received bonus payments to which the equivalent female workers were not entitled.  As this was addressed using the equal pay legislation it has to be assumed that the bonus payments were deemed to be contractual.  However, if the bonus scheme had been set up in such a way that it was non-contractual the sex discrimination legislation would apply instead.

So how do you decide which legislation applies?  Fortunately the case of Peake vs. Automotive Products Ltd (1977) provides some useful guidance.  To summarise this says:

• If the difference in pay relates to the employment contract then the equal pay legislation applies;
• If the case concerns less favourable treatment in relation to other contractual terms then usually the equal pay legislation applies;
• If the less favourable treatment relates to something non-contractual then the sex discrimination legislation applies.

So complaints about things like discretionary bonus payments, pay rises and job offers are not normally equal pay cases but sex discrimination cases.  This is important because the burden of proof and the related remedies differ depending on which legislation applies.

This distinction is also important in carrying out an equal pay audit.  For example, as a rule of thumb bonus payments should be included in the audit if they are contractual but may be excluded if non-contractual.  The same goes for other terms and conditions meaning a full audit can become quite wide-ranging in its scope.