Equal Pay Day: Gordon Brown's £5bn local authority equal pay black hole

Time's up to meet council equal pay commitments on Good Friday: Equal Pay Day 2007

See below for

• Who is owed and what are they due?

• Cash Crisis: Regional Breakdown of Equal Pay Liabilities

• Time-line

• Local Authority Equal Pay Fact Sheet

The Gender Equality Duty whereby public authorities have a duty to pay men and women equally comes into force on Good Friday, 6th April 2007. By then all public authorities in England, Wales and Scotland must demonstrate that they are actively promoting equal pay for women and men and that they are eliminating sexual discrimination and harassment in the workplace.

But despite fine words, and thirty seven years after the Equal Pay Act 1970, and whole forests cut down to produce gender equality statements, 2/3 of local authorities still have to pay men and women equally. The best estimates are that local authorities across the UK now owe many of their poorest council workers £5bn, and equal pay lawyers are preparing to bring thousands of test cases across the country to force them to pay up.

Thousands of low paid, mostly female local government workers, are each missing out several thousands of pounds in back-pay local councils admit they owe them because local government bosses have failed to implement equal pay deals on time, or in some cases are attempting to negotiate agreements with unions to pay only a fraction of the amount local authorities admit they owe.

Many of the poorest paid council workers such as dinner ladies and carers could be due a windfall bonus of thousands of pounds in some cases, but local authorities have not implemented the processes they signed up to. The problem is that they are capped and precluded from borrowing the money they owe and to pay up would breach Gordon Brown’s Golden Rule on public sector borrowing.

Typically liabilities fall heaviest on large metropolitan Labour controlled authorities where secret deals largely benefiting male manual workers -- productivity bonuses with no production targets and attendance allowances where workers only had to show up to get paid -- were agreed with unions to attempt to sidestep prices and incomes and equal pay policies in the 60s and 70s and are still paid today.

Despite the £5bn shortfall, in 2006 the Treasury set the national capitalisation fund for single status at a mere £200m.

Trade unions have often failed to persuade councils to pay up on their liabilities and in some cases have actively continued to collude with local authority employers to deprive workers of their dues.

Now specialist equal pay lawyers are stepping in to work on a no-win-no-fee basis are moving in, bringing employment tribunal cases on behalf of workers to ensure councils pay up.

Conrad Murray of equalpaylawyer.co.uk which is currently bringing thousands of the claims nationwide says:

“Virtually every local authority in the country has paid lip service to equal pay for years but most have failed to implement it on their own turf. Local Government employers agreed to a ten year time-scale to implement the policy for the workers but despite their fine words, councils have been dipping into the pay packets of their poorest workers and now cumulatively owe then in excess of £5bn.

"Many have not even started the process of implementing equal pay, a process which can take up to three years, to the detriment of people who often have no savings and live on the breadline.

The Labour Party's equality commitment produced on their own website says: “Labour starts from a simple belief: that everyone is of equal value”. Equal Value’ is the basis of an Equal Pay claim. It seems that we are all equal but men are more equal than women.

Murray sees the main problem as being that the people most disadvantaged by unequal pay are in front-line roles, whereas decision makers and office staff in Civic Centres and County Halls have been overpaid for years and benefited most from traditional pay scales.

"As many as 85% of front-line staff in schools, social care and catering and cleaning services will be eligible for pay-rises and back-pay" says Murray. "These are largely, but not exclusively women. Sadly we are getting calls from people who have struggled along having been underpaid in these roles for years but may not get paid because their council employers did not warn them of the need to make a claim. In some instances we can reopen these - in others the claim may be lost."

There is a time limit of six months after leaving or changing jobs to making a claim. Every council worker should be enquiring whether they are due an increase and considering filing a grievance. Anyone thinking of leaving or retiring who has not reached a settlement should be filing a claim now. Anyone changing jobs within an authority or even being promoted should be taking legal advice on their position.

"Ironically, given the subject, we are seeing some hard hearted councils regarding the taking of extended maternity leave as a break in service and thus an opportunity to dodge their responsibilities" Murray says. "Others are firing and rehiring workers to try and circumvent their responsibilities. It's a national disgrace."

What are they due?

In 1997, every local authority in Britain agreed to a ten year period to implement a "single status" agreement which should have seen workers get equal pay for work of equal value.

The deadline for implementation was 31st March 2007 but the Local Government Employers (LGE), the trade body for councils, estimate that 2/3 of authorities will miss it, depriving thousands of workers of thousands of pounds in cash that they owe them. But new research shows that 37 years after the Equal Pay Act and 10 years after their own agreement, and despite a legal obligation to meet Equal Pay, some councils have not even started the job evaluation process.

The Gender Equality Duty enforces the council obligation in law and comes into force on Good Friday, April 6th 2007.

Workers who have suffered discrimination in the past should receive six years back pay which could amount to £20,000. Some councils and unions are entering into settlements where workers are often pressed to accept only two years, with some workers missing out on a windfall payout by as much as £12,000.

But by delaying payouts councils have escalated their liabilities to the point where they cannot afford to pay, usually by dipping into the pockets of their poorest workers:

Cash crisis: Regional breakdown of admitted equal pay liabilities

Scotland - £560m: Scotland's 32 councils told the Scottish parliament they faced up to £560m in compensation and back pay last week. The councils have called on the Scottish Executive to help meet spiralling costs. In some councils, compensation deals have already been reached. Glasgow has spent an estimated £7m in North Lanarkshire the bill was a reported £23m while in Fife it cost £8m. The Convention for Scottish Local Authorities said local government was not in a "strong position" to be able to deal with the extra costs.

North East - £300m: Equal pay liabilities in the North East have been well documented over the past few years. Newcastle City Council has already spent about £17m in equal pay costs. Last week, the council said it expected to fork out another £5.6m to complete the process. Sunderland County Council has spent a reported £15m, followed by North Tyneside with an estimated £13m, and Durham County Council at £12m.

Yorkshire & Humberside - £371m: Local Government Employers has estimated that Yorkshire & Humberside would have to fork out £371m in equal pay costs. The employers' body for the region said nine out of 22 councils had implemented the single status agreement, two had partially completed, and 11 councils were expecting to implement in 2008.

North West - £740m: Local Government Employers has put the total cost of liabilities for the North West region at a massive £740m. Cumbria County Council has an estimated £50m to fork out. Bolton Council also had to borrow about £8m but managed to reach an out-of-court settlement with most of the staff involved.

West Midlands - £928m: The West Midlands is the worst area to be hit by equal pay liabilities, with a staggering record £928m for the region's 38 local authorities in estimated costs. Birmingham City Council warned that an equal pay deal could reach £200m in legal costs, wage rises and back pay. Coventry City Council estimated that its total costs could reach almost £11m. Colin Williams, director of local government services at West Midlands Local Government Association, told Personnel Today that 50% of councils had completed their equal pay review and a further 25% were "well on the way to complete in the near future".

East Midlands - £83m: The local government body for East Midlands could not confirm Local Government Employers' estimate of £83m in liabilities. Leicestershire County Council lost a high-profile employment tribunal over equal pay to public sector union Unison in 2005, with the council ordered to impose a new pay system. The council estimated the cost in back pay and new wage structures could reach £8m.

Wales - £300m: The Welsh Local Government Association said councils were committed to tackling the issue of equal pay but warned that it could reach £300m. Chief executive Steve Thomas said big capital programmes, such as the building of schools or road repairs, might have to go on the backburner to meet the cost of liabilities.

East of England - £18m: The East of England Regional Assembly said that nine councils had introduced single status and 18 had been "slightly hampered".

London - £200m: A spokesman for London Councils said: "At least nine London councils have implemented deals, 18 are in the process of doing so, and five councils have yet to reach a deal. The cost is variable, but the worst case scenario could see London councils paying out £200m in back pay and wage costs."

South West - £100m: The estimated total liabilities for the South West region could reach £100m, but South West Provincial Employers could not confirm this figure. A spokesman said: "Twenty two of the South West region's 51 local authorities have successfully implemented a pay and grading review. A further 24 anticipate having completed this exercise by August 2007. As with the rest of the country, the financial implications associated with implementation of revised pay structures are significant."

South East - £35m: Local Government Employers estimated the South East region faced a total of £35m in liabilities, but South East Employers refused to confirm this figure, or provide any details on which councils had implemented the single status programme.

research courtesy Personnel Today

Timeline

• 1997: National Joint Council (NJC) of employers and unions devise the single status agreement to end pay discrimination.

• 2004: NJC sets the timetable for the completion and implementation of pay and grading reviews to be completed by 31 March 2007.

• 2006: The Treasury announces it will set a national capitalisation fund for local government liability costs on single status agreements, with a cap of £200m.

• 2007: Councils have until 31 March to implement single status deals. More than two-thirds of councils are expected to miss the deadline.
  

Fact sheet

• Women make up 65% of the public sector workforce.

• Women working full-time within the public sector earn on average 14% less than their male counterparts.

• Women working on a part-time basis in the public sector earn 33% less per hour than their full-time male counterparts.

• The full-time pay gap within the public sector has barely changed since 1998 whilst the part time pay gap has reduced only slightly.

Source : Equal Opportunities Commission

Notes for editors: Conrad Murray is available on 01392 832678 or 07918 167405

Ask your local authorities whether they have met their equal pay commitments: The question you need to ask them is whether (or when) they plan to achieve equal pay status under the single status agreement reached in 2007. If they have not reached it, say "they are working towards it" or quote a date in the future then they have failed to meet their commitment and rare in breach. Some authorities claim not to be party to the three year pay deal. This does not exempt them from the Gender Equality Duty which comes into force on April 6th 2007 and they are still in breach.

Back-pay can be claimed for up to six years. Employees of councils which have not met their commitments need to file a "grievance" to secure their position. Any employee leaving, retiring or even changing jobs within an authority should also file a grievance as if they do not claim within 6 months of leaving or changing jobs, the claim may become invalid.

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