01 September 2006
Almost a decade since the Single Status Agreement on equal pay was signed, many councils have yet to put it into practice and others have run into legal challenges and financial hurdles. Now time is running out
Equal pay or, more accurately, unequal pay has dominated the headlines in local government for some time now. But the Single Status Agreement, which was drawn up by employers and trade unions to redress the issue for once and for all, is still far from comprehensively implemented.
When the agreement was signed in 1997, it seemed generous to allow councils until April 2007 for full implementation. A small number of local authorities cracked on and implemented the agreement quickly. However, some of those have subsequently been challenged.
A far greater number held back and did not take action, possibly because of the administrative burden, the financial costs (particularly in back pay and pay protection) or for political reasons. Some councils, it is said, expected the government to come to the rescue with financial aid.
Unfortunately, with less than seven months to go, fewer than half of all local authorities have completed implementation and the path has become far more onerous.
First, the government has stated that it will not introduce special arrangements to help fund the deficits, unlike in the NHS and elsewhere. Local authorities need to find the money internally. Against a backdrop of finding Gershon efficiency savings of over 2% and less central funding, this is extremely difficult.
Secondly, pressure is growing on local authorities to face up to the difficulties and complete deals. The trade unions are being pushed into action themselves by disgruntled members, who seem far more aware of their entitlements under the law.
This difficulty has escalated now with the case against the GMB union, involving Middlesbrough Borough Council. There, the union had agreed settlements below the full legal entitlement, taking a wider view of the context and seeking to avoid redundancies. However, it was challenged and found to have discriminated against the women involved. Further sex discrimination claims against trade unions are progressing.
Of even more concern, however, is the growing armoury of weapons available to staff to pursue claims. Aside from the collective might of the trade unions, staff are resorting to mass grievances, seeking assistance from aggressive solicitors in the private sector, bringing class actions under Conditional Fee Arrangements, using Freedom of Information requests to glean information and, ultimately, threats of industrial action by key workers. New statutory resolution procedures threaten harsher penalties if local authorities do not follow proper procedures, for example in relation to those grievances.
Lately, some large settlements have sent shock waves round the public sector. The North Cumbria Acute NHS Trust entered an arrangement reputed to have cost almost £300m. A group of northern local authorities paid out more than £100m for their agreement. Anecdotal evidence indicates that the wage bill will rise by 3.5% to 5% under the new pay terms.
Local authorities are sitting ducks for these actions. Although historically there have been discriminatory practices in both public and private sectors, actions are far scarcer in the private sector. The public sector system is so much more transparent and publicised that it makes local authorities easy targets.
So what can they do? The 'do nothing' option is not to be recommended. Authorities should work towards concluding a commercially workable collective agreement with the trade unions and seek full buy-in. Sometimes this will be difficult as there are winners and losers on the union sides too and there is by no means unanimity of views. Agreements in relation to back pay and pay protection must be robust and legally binding if they are to be immune to challenge, and this takes time and effort.
It is in the area of back pay that the greatest gains can be made by work on the local authority side. If a full or partial defence to the full liability period of six years can be identified, this will substantially reduce the amount of money paid out. The best case here is to identify, and importantly evidence, a 'genuine material factor' to justify different levels of pay, which is not linked to gender, such as market forces or productivity. Even if this cannot be achieved, it might be possible to find a partial reduction of liability that will improve the bargaining position. Authorities such as the London Borough of Islington have shown that an investment of time at a senior level reaps dividends.
If this buy-in is not possible, then authorities have to consider the 'nuclear option' of terminating the contracts of employment in issue and seeking to reappoint staff on new terms and conditions that will comply. Such serious employment actions would need careful thought and advice. But local authorities are between a rock and a hard place.
One thing is sure and that is that this problem is not going to go away.
Stephen Cirell is head of local government and Professor John Bennett is a consultant solicitor with Eversheds. For equal pay information contact [email protected]
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