Labour’s equal pay plan for ethnic minorities is all stakeholder, and no substance

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Good morning. The biggest story in Westminster is the King’s health following his cancer diagnosis. I don’t have anything to add on that, other than my hope that he recovers quickly and entirely.

What I do have thoughts about is Labour’s frankly half-baked proposals on equal pay claims for ethnic minorities. Some more on that below.

A divisive policy

A Labour government would “extend” the right to make equal pay claims to ethnic minorities and people with disabilities as part of their race equality act, Pippa Crerar reveals in the Guardian.

I put the word “extend” in inverted commas because although the right to bring a legal case against pay discrimination on the basis of sex is older than the proposed right to do so on the basis of disability or ethnicity, it is not clear that this older right would necessarily be a “better” one.

By law, men and women must get equal pay for doing “equal work”. To make an equal pay claim on the grounds of sex, you have to find an exact comparator. This is a very hard barrier to overcome. It is stricter than the criteria you have to hit if you are suing your employer for discrimination on the basis of race or disability. As the employment lawyer Darren Newman explains on his blog:

For complaints about pay (or any other contractual terms) women (or men) have to bring an equal pay claim rather than a more straightforward discrimination claim. This means finding an actual comparator — rather than a hypothetical one — employed on “equal work”. We have decades of case law on what equal work means and it is not a straightforward question. Equal pay is an all or nothing claim. Your work is either equal or it isn’t. If your job is worth 80% of that of your chosen comparator then you lose. It doesn’t matter if the comparator’s pay is more than twice what you are earning. No matter how disproportionate the differential, the fact that the two jobs are not equal defeats the claim.

It is true that in an equal pay claim there is no need to prove discrimination — but that doesn’t matter much in practice. In reality, the employer will usually defend the claim by putting forward a ‘material factor’ defence. That just means there needs to be a reason for the difference in pay. If the reason is genuine then the question is whether it is discriminatory — either directly or indirectly. Most equal pay cases eventually boil down to the question of whether the pay is discriminatory. If the claim is won the claimant can get up to six years’ back-pay and there is no award for injury to feelings.

Suppose — under current law — an employer discriminates on the grounds of race when it comes to pay? Just as in an equal pay claim the question will boil down to whether the difference in pay is due to direct or indirect discrimination — but there will be no need to find a real-life comparator and the Tribunal could take into account a disproportionate difference in pay between two technically unequal roles. If the claim succeeds there is no cap on compensation and an award will be made for injury to feelings.

The consensus among employment lawyers I have spoken to is that ethnic minorities and people with disabilities are better served by current equalities law than the proposed legislation to “extend” the right to make equal pay claims to these groups. (If you are an employment lawyer who disagrees, please do email me.)

In practice, I think there is no real prospect of this change actually coming into law — as the Guardian reports, this would come into force only following consultation with unions and businesses. My guess is that during this consultation, unions and employment lawyers would say “are you joking? If anything, it would be much better if we abolished the Equal Pay Act and gave people the right to bring pay discrimination claims on the grounds of sex under the Equality Act, rather than the other way round”.

What’s going on here? The answer, I think, is “stakeholder management”. Way back in 2020, the Labour leadership made a whole bunch of warm noises about racial equality. Keir Starmer and Angela Rayner “took a knee” in Starmer’s office and the Labour leadership pledged to introduce a racial equality act.

Now, maybe you think that this was one of the best days in Starmer’s leadership. But as former Labour staffer Tom Hamilton points out in his excellent (free!) Substack on political attack, Dividing Lines:

Whatever the rights and wrongs of the symbolism of taking the knee on the day of George Floyd’s funeral, it’s clear that Starmer’s team now view it as a mistake, and equally clear that the Tories do too.

The Labour leadership desperately wishes that Starmer hadn’t taken a knee and really regrets promising a race equality act (many politicians and aides close to the leadership have privately referred to the planned legislation as a “stakeholder management act” or “the whyohwhy did we promise this act” or some variation thereof). Starmer’s team just wants to be able to pledge something good-sounding but low effort.

“Giving ethnic minorities the right to bring equal pay claims on the same terms as claims on the basis of sex” is slap-bang in the middle of that “good-sounding but low-effort” zone. Labour is promising some relatively substantial stuff on policing (for example, at the moment, while my ethnicity is logged when I am stopped and searched in the street, that wouldn’t have been the case if my car were stopped on the same journey. This is something Labour proposes to change.)

But the golden thread that links everything it is planning to do is that a) it costs nothing and b) it sounds more impressive than it is. For example, Tony Sewell’s report on racial equalities back in 2020-21 proposed that the UK’s equalities watchdog should be given the power to oversee algorithms. Labour proposes nothing on algorithms, machine learning or AI more broadly as far as racial equality is concerned.

How seriously should employers take this? Well, I think it is unlikely in the extreme that a Labour government will actually legislate to weaken the basis on which ethnic minorities or people with disabilities bring equal pay claims. I think it’s more likely that what will eventually happen will look a lot more like what the Conservatives have already done on pay gap reporting and in the fine detail of the Sewell report, rather than pledges that should primarily be understood as stakeholder management. But the spirit of what Labour is asking businesses — much more detail in terms of data collection, much more admin as far as protected characteristics are concerned — is a good guide to the direction of travel, even though the substance of the policy isn’t.

Now try this

I’ve been listening to The Last Dinner Party’s debut record pretty much on a loop since it came out on Friday — including while writing my column this week. I think Ludovic Hunter-Tilney’s review is right on the money,

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