Decoding the Employment Rights Bill: A Deep Dive into Discrimination Legislation

In February 2024, Labour disclosed intentions to implement considerable changes to discrimination law. It committed to introduce a new Race Equality Act, which would permit equal pay claims based on ethnicity and disability, as well as introduce dual (or intersectional) discrimination. These pledges were reiterated in Labour’s Manifesto prior to last year’s election.

Following this, Labour secured victory in the election, and the Employment Rights Bill was published. This document addresses various facets of discrimination law, including pivotal proposals aimed at enhancing protection from workplace harassment. Additionally, this Bill will mandate employers with 250 or more employees to publish an “equality action plan” focusing on gender equality, which includes tackling the gender pay disparity and identifying contract workers in gender pay gap reports.

The “Next Steps” document, released alongside the Employment Rights Bill, verifies that the government also plans to publish and consult on a draft Equality (Race and Disability) Bill. This will encompass the expansion of equal pay rights. Furthermore, it will broaden pay gap reporting responsibilities, safeguard equal pay rights during outsourcing, and establish a new regulatory and enforcement unit specifically for equal pay.

Equal pay expanded to ethnicity and disability

The entitlement to file an “equal pay” claim is presently restricted to disparities in pay based on sex. Special provisions regarding equality of terms are outlined in the Equality Act, which pertains to differences in contractual terms (including remuneration) between male and female workers.

This does not imply that claims relating to pay cannot be instituted based on other protected characteristics such as race and disability; they may still be pursued as a direct or indirect discrimination claim. Equal pay legislation is an additional form of discrimination protection first introduced in 1970, recognizing the historical context of pay discrimination predominantly concerning jobs traditionally viewed as “women’s” and “men’s.” (For further details on this intricate field of law, refer to our Inbrief on equal pay).

The government intends to extend the right to submit equal pay claims to black, Asian, and minority ethnic employees as well as disabled staff members. This would indicate that equal pay claims predicated on ethnicity or disability would be treated equivalently to those based on sex. While there could be an issue of pay discrimination concerning ethnicity and disability, is widening equal pay law an effective method of addressing the issue?

The succinct reply is likely “no.” In the interest of a balanced perspective, there are some potential benefits to filing an equal pay claim in comparison to a standard discrimination claim:

• A worker “merely” (though practical challenges exist) needs to demonstrate that an individual of the opposite sex receives a higher wage for performing a job of equal value. The employer must then prove that this disparity is for a legitimate reason other than sex, shifting the responsibility to the employer to clarify the difference rather than placing the onus on the worker to establish that it is discrimination.
• If data reveals a pay difference between two jobs of equal value, one predominantly performed by women and the other by men, the employer might be required to objectively substantiate this disparity. This means the employer must establish that its justification for the difference is a proportionate means of achieving a legitimate purpose if female (or male) workers face disadvantages.
• A successful claim results in a permanent adjustment to the worker’s contract. Furthermore, a longer timeframe exists for initiating claims (six months from the conclusion of employment instead of three months from the act of discrimination), and the unsuccessful employer may be mandated to conduct a compulsory equal pay audit.

Nonetheless, despite these “advantages” for employees, they are likely outweighed by the substantial complications associated with extending equal pay to ethnicity and disability:

• Arguably most critically – equal pay legislation is exceedingly intricate! Numerous equal pay claims become ensnared in legal disputes regarding suitable comparators and, notably, whether jobs are of equal value. There exists a series of tests in an equal pay claim which may necessitate expert testimony, contested job descriptions extending to hundreds of pages, and numerous preliminary hearings spanning many years. These claims are notorious for being slow, challenging for unrepresented complainants to pursue, and costly for represented individuals unless supported by a union. Consider the protracted equal pay litigation against various major supermarkets, which has persisted for over a decade and remains unresolved.
• A worker must identify a concrete comparator performing like work or work of equal value, whereas a standard discrimination claim may rely on a hypothetical assertion that, for instance, if I were white or non-disabled, I would earn more. The existing equal pay regulations only permit this hypothetical argument if a claim cannot be pursued as an equal pay claim, meaning that workers with an available comparator must adhere to the more complex equal pay regulations.
• The matter of a comparator regarding disability is particularly convoluted. Will this be confined to individuals who meet the definition of disability being able to compare themselves to someone who does not? Or will comparisons among various disabilities be allowed, for instance, a claim that someone with a mental illness receives less pay than a person with a physical disability?
• The comparators issue is also complex concerning ethnicity, potentially raising sensitive matters regarding comparators with mixed heritage and the risk of making assumptions about individuals’ backgrounds. Analogous to disability, will the comparison be confined to “white” workers, or will individuals from different ethnic backgrounds be permitted to compare among themselves? As discussed in our article on the existing ethnicity pay gap reporting guidelines, black employees typically earn less, on average, than Asian employees. A binary approach allowing comparison solely between white workers and all other ethnic groups would overlook these nuances.
• Equal pay claims have a limit of six years for back pay, and there is no compensation for emotional distress. In ordinary discrimination claims, there is no such restriction on damages.

It is significantly less apparent that there exists occupational segregation based on ethnicity or disability in the same manner as has historically occurred regarding sex. The most notable successful equal pay cases have arisen from group claims backed by unions, where large cohorts of female workers have been able to compare themselves with groups of male employees performing similar roles (initially in the public sector, and more recently in retail, such as the recent claims against Next). While there may be certain positions where black, Asian, and other ethnic minority workers are overrepresented, it remains unclear whether there will be comparable roles predominantly occupied by white workers that could serve as a basis for comparison. It also seems exceedingly unlikely that this would apply to disabled workers.

Additional equal pay proposals

The government suggests mandating employers with more than 250 workers to publish data regarding ethnicity and disability

pay disparity reports. This also presents difficulties, particularly concerning group classifications and whether the figures will hold significance, a topic we delve into deeper in our discussion on the preceding government’s ethnicity pay gap reporting recommendations.

Equal remuneration claims are presently made by individuals, though often collectively – there is no governmental enforcement of the equal pay right. The government’s Next Steps publication indicates that it will establish a new regulatory enforcement body for equal pay. It appears that this is planned to be distinct from the initiatives in the Employment Rights Bill aimed at forming the Fair Work Agency to uphold other employment entitlements such as minimum wage, vacation remuneration, and sick leave pay.

The Next Steps publication further asserts that new initiatives will be introduced “ensuring that outsourcing of services can no longer be exploited by employers to evade paying equal wages.” Additional information has not been disclosed, but this is presumably targeted at scenarios where a contracted worker receives lower compensation than staff who are directly employed. This may also correlate with recommendations in the Employment Rights Bill to preclude former public sector workers and private sector employees from being hired under differing terms and conditions.

In summary, the government’s strategy appears to adopt a comprehensive stance towards gender, ethnicity, and disability pay discrimination. These topics are extremely significant, but it might be more productive to amend the current convoluted equal pay regulations instead of introducing new factors into a malfunctioning system.

Combined discrimination

The other notable proposal is the entitlement to claim “combined discrimination.” This pertains to instances where an individual alleges they have faced discrimination due to possessing two protected attributes, such as being a Muslim woman. This is often labeled “intersectional” discrimination.

The Equality Act has consistently included a clause regarding dual discrimination (termed “combined” discrimination), yet this has never been enacted. This stipulates that it is direct discrimination to treat an individual less favorably due to a combination of two pertinent protected traits. The government could activate dual discrimination simply by reinstating this clause. However, it should be highlighted that the existing provision is rather limited; it solely encompasses direct discrimination, excluding indirect discrimination or harassment. Moreover, it only permits the combination of two characteristics, which may not suffice in every situation (for instance, discrimination against young black men).

There are discussions suggesting that dual discrimination is essential to protect specific groups, including women undergoing menopause. This form of discrimination essentially arises from being an older woman. It can be argued that this does not constitute sex discrimination (as a younger woman would not be treated similarly) nor age discrimination (as an older male would not face the same treatment). In practice, however, we have not observed Employment Tribunals evaluating claims in this manner. They are more prone to conclude that the treatment constitutes both types of discrimination separately.

Although this may not significantly impact practice, permitting claims based on combined traits would align more closely with the reality of discrimination for certain groups. One potential additional advantage is enhancing employers’ capacity to undertake positive action. Acknowledgment of intersectional discrimination could facilitate targeted actions for groups facing disadvantages due to a combination of characteristics, for example, Asian women or older men. Currently, the employer must demonstrate that both groups are disadvantaged before affirmative action can be deemed lawful, as specified in the current governmental guidance on positive action in the workplace.

Despite all of this, it is noteworthy that the initial proposal for enacting dual discrimination is not included in the Next Steps publication – suggesting it may have been postponed.

What comes next?

The new government may have commendable intentions in aiming to tackle ongoing discrimination against specific groups, but complicating the process for employees to file discrimination claims based on race or disability surely is not the appropriate approach. It is improbable that the already overwhelmed Employment Tribunal system will welcome or be capable of managing equal pay claims being broadened to encompass additional protected attributes, along with the resultant necessity for multi-phase proceedings that could extend over several years. It is unclear why, if the government perceives this as an issue needing resolution, it has not opted to take the opposite approach and permit employees to file sex discrimination complaints regarding contractual pay through the standard discrimination pathway, potentially even eliminating the cumbersome, outdated, and expensive equal pay system. Such a change would undoubtedly be welcomed by both employers and employees.

Consultation regarding the proposal to extend equal pay claims, alongside other initiatives to be featured in the draft Equality (Race and Disability) Bill, will occur. This document has yet to be released. If all proposals proceed as planned, we currently expect that legal modifications will not be implemented until 2026 at the earliest, in line with anticipated developments concerning the Employment Rights Bill.