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Employers Face Increasing Pressure Around Equal Pay

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The BBC is feeling the pressure at the moment over some alarming incidences of pay inequalities among its workforce, with BBC bosses now making a rare move to cut some male news reporters’ wages by 30 percent, in a bid to close some of the gap.

In this case, the six male employees in question have agreed to the pay cut, with the BBC Radio Four Today programme presenter, John Humphreys, saying that this is a reasonable move in light of reduced BBC budgets. However, this is an unusual action for an employer to take, and it can be fraught with legal risks.

Legally, an employer cannot impose a pay cut upon its employees if they have an employment contract which sets out details of their salary entitlement. So, this decision by BBC bosses is one that those employees will have to consent to. They do not have to give their consent and they could take legal action to prevent any such change.

However, the BBC is, in many ways, a unique case in point. It is part-funded by and accountable to licence fee payers, its presenters are public figures and its workings are open to close public scrutiny. Clearly, if the male presenters in question balk at this change, there would be consequences for them in the court of public opinion.

The BBC won’t be the only employer caught up in this controversy this year. The UK is one of the first countries in the world to push through Gender Pay Reporting legislation. This legislation requires employers with 250 or more employees to publish statutory calculations illustrating any pay gap between male and female employees. This is ushering in a new era of transparency that many will welcome but it will put the onus on employers to get their house in order when it comes to unequal pay.

While there are no financial penalties levied at employers who fail to produce this report there are compelling reasons to do so, beyond the legalities involved. The issue of equality and fairness in the workplace has become a watershed one, and companies are being judged by their customers and clients based upon how they conduct themselves.

Part of the Equality Act 2010, the Right to Equal Pay, states that businesses should pay men and women equally for carrying out the same tasks or those of equal value as far as skill, effort, decision-making and responsibility.

Employees who aren’t being paid equally are being treated illegally. In the first instance, it is sensible for an employee to talk to their employer to try to resolve the issue informally if they are losing out on pay because of their sex. If this doesn’t yield results, a claim for lost earnings can be brought, subject to certain time limitations.

Of course, the logical answer to closing the gender pay gap might be to increase the wages of female workers rather than to reduce the wages of their male counterparts, but for large organisations like the BBC, that pay high wages to its big names, this option clearly isn’t one they relish.

The corporation should be aware that if it, as an employer, moves to reduce an employee’s salary without their consent, the employee will be entitled to: 

  • Resign and pursue a claim for constructive unfair dismissal; or
  • Continue to work under protest but sue for compensation for the loss they have suffered due to their reduced in salary

If an employee doesn’t agree to a reduction in pay, an employer could terminate their employment contract by serving them with contractual notice, then offer a new contract on a lower salary. Employees whose contracts are terminated can bring claims for unfair dismissal, even if they have accepted the new contract.

Be aware too that if a certain number of employees are affected by proposals like these, an employer is legally obliged to consult with a trade union or employee representatives about the changes. If they don’t they may face hefty compensation claims.

The results of a claim for unfair dismissal will depends upon:

  • Whether the employer can establish a substantial business reason for the pay reduction
  • Whether the disadvantages the employee would suffer as a result of the changes were properly considered and whether these outweighed the advantages to the employer of implementing the changes
  • Whether the employer had engaged in meaningful consultation about the salary cut
  • Whether a majority of the employees accepted the changes
  • Whether the employer acted reasonably when responding to employee objections

As you can see, if an employer decides to pursue this course of action, ensuring the pay cut is justified and that each step of the process is legally compliant can not only help to avoid costly Employment Tribunals, but can also serve to ensure good employee relations.

If you have any questions on this topic, or would like to discuss it further, please feel free to contact us on 03333 208644 or alternatively via email at