15 February 2008
The 1997 Single Status Agreement was supposed to end unequal pay in local government. But a decade on, women are still underpaid, thousands of cases are clogged up in tribunals and workers are on the warpath. So what went wrong, asks Tash Shifrin
The picket lines were up in Birmingham last week as 20,000 council workers – members of Unison, the GMB and Unite – walked out in protest at the authority's imposition of a new pay structure. But the impact of the dispute at England's largest local authority will be felt far more widely: at its heart is a horribly tangled knot – the complex problem of equal pay.
At first sight, it seems simple: men and women should be entitled to equal pay for work of equal value. That much everyone agrees on. But the process of implementing equal pay in local government has all sides at loggerheads – the employers, the unions, lawyers representing low-paid women, the new equalities watchdog, and the government.
And, as the tangled tale proceeds, both male and female employees could argue they are losing out. In Birmingham, the city council says 45% of staff will get a salary rise through the new structure, with 41% seeing no change. But 14% will have their wages cut.
The unions say huge numbers of staff stand to lose between £1,000 and £18,000 a year. Unison West Midlands regional official Tony Rabaiotti says 'several thousand' of these, in a bitter twist, are women. And he argues that Birmingham's planned seven-point pay scale 'essentially means we won't get equality', because it fails to offer low-paid workers, 'most of them women', sufficient chance to progress.
The authority's move to impose the pay rates by terminating workers' contracts and rehiring them on new terms has added to the strikers' anger.
Birmingham is not the only local authority feeling the heat of industrial action over its attempts to implement the 1997 national Single Status Agreement – the deal aimed at harmonising manual and white-collar pay and giving men and women equal pay for work of equal value.
In Scotland, there have been strikes at Argyll & Bute Council over a new pay structure, and workers in Aberdeen are balloting. And in Waltham Forest, east London, refuse collectors surrounded the town hall with dustcarts in protest at their new pay scheme.
At the same time, employment tribunals across the country are facing a deluge of claims under the 1970 Equal Pay Act – some brought by the unions, but an increasing number by no-win, no-fee lawyers on behalf of groups of women. An estimated 50,000 cases covering local government staff are already in the pipeline, with the number expected to increase sharply this year.
For women workers – who make up 75% of local government staff – unequal pay means poverty wages. Rabaiotti, who has hundreds of Birmingham cases in the tribunal process, says home care assistants are on '£8,000 a year less than their male comparators'.
The strikes and the swamped tribunals are just two aspects of the equal pay crisis. Across the country, local authorities are wondering how severe the financial fallout could be.
Local Government Employers estimates that the total cost of the pay reviews councils must undertake to implement the Single Status Agreement is £2.8bn. Then there are ongoing costs of £1.5bn, pay protection costs of £400m and £1bn in back pay.
So far, fewer than half of councils have carried out a pay review, more than ten years after the Single Status Agreement was signed. LGE managing director Jan Parkinson says: 'Most of the big councils haven't yet come to agreements.'
It seems incredible that progress has been so slow. But the first stage of implementing the 1997 deal focused not on equal pay but on harmonising working hours, bringing in a 37-hour week for manual workers. Although the agreement required authorities to conduct equal pay reviews, it did not set a date. A timetable was set out in a 2004 National Joint Council agreement, specifying that reviews should be completed by March 31 last year.
Almost one in ten councils has chosen not to carry out a pay review at all, having opted out of the voluntary national agreement. But elsewhere councils are still struggling to get the overhaul done.
Katherine Rake, director of the Fawcett Society, which campaigns for equality between women and men, says local authorities haven't been proactive. If they had acted earlier, 'we wouldn't be in this situation now', she says.
But Parkinson explains: 'It's just so difficult to deal with. It sounds like a trite answer but it is so complex.'
She says 'levelling up' – raising the wages in underpaid roles to the level of their higher-paid comparators, rather than cutting some workers' pay – is not an option. 'We couldn't afford it.' Even where some staff lose pay, the cost of bringing in a new system is another 5% on the wages bill, Parkinson says.
Apart from the problem of finding the money, the higher pay bill 'makes us uncompetitive with the private sector – you run the danger of having to outsource services', she points out.
Now another element has come into play: the no-win, no-fee lawyers who are pumping new Equal Pay Act claims into the already-flooded tribunal system. Stefan Cross, an equal pay specialist, is one of them. His firm has around 25,000 cases on its books. If the cases are won, it will secure up to 25% of the money awarded to the women.
Cross is launching claims on behalf of women council workers against both employers and unions, where they have negotiated and agreed new pay structures. Neither side is ensuring that women get the maximum amount, he says, citing Hull, Bristol and Newcastle councils, 'the early implementers of the SSA'. Their revised grading structures 'were either exactly the same or 5% or 6% better', he claims. He contrasts this with County Durham, where 50 cleaners he represented 'are now being paid 33% more than their colleagues'. Women should be getting these more substantial awards, he says.
Although the unions are locked in battle with councils such as Birmingham, both sides are deeply worried by the no-win, no-fee legal challenges.
The equal pay situation is now 'just a nightmare', Parkinson says. 'In 1997, I don't think any of us – not the unions or anyone – had any idea how complex it would be. The problem with tribunals and the legal system is that the case law develops.'
As soon as one issue is dealt with, another comes up in case law, throwing negotiations over pay reviews into fresh uncertainty, she says. An example is Redcar & Cleveland Borough Council vs Bainbridge and others, where the question of transitional arrangements and pay protection is at stake. 'The judge says because you're protecting men... you're perpetuating inequality. It's a Pandora's box.'
Some councils that had agreed pay reviews with the unions 'are now facing further legal challenges', Parkinson says. No-one knows the extent of the councils' liabilities, she adds.
Unison legal director Bronwyn McKenna agrees that the legal challenges to collective agreements 'have implications for the whole collective bargaining process'. She points out that Unison is also backing tribunal cases. 'The unions are taking more cases than the no-win, no-fee lawyers,' she says. But she adds: 'As a union, we want to secure not just back pay, which tends to be the focus for no-win, no-fee lawyers, but to ensure they are entitled to equal pay in future.'
Negotiations are also 'the best approach' because 'lots of women who are underpaid will not have a good claim in law', McKenna argues, adding that negotiated deals can also raise women's pay much faster than a tribunal case that takes years.
And she notes that union members only have to pay their membership subscriptions to receive Unison's help, while the lawyers – when successful – scoop a large share of the women's winnings. 'It's a shame that so much of the money that local authorities are paying out is ending up in the pockets of the lawyers rather than the women.'
Local authorities are increasingly nervous about what the future has in store. In January, LGE brought council representatives together for a private summit to discuss the crisis. An LGE spokesman who was at the meeting says the derailment of existing deals and settlements by new case law precedents set at tribunals was a major concern.
'People want the government to intervene. There is one council that settled years ago but can't pay a bean because of no-win, no-fee cases still with the tribunal.' There was 'a lot of feeling that the government needs to step in' to halt tribunal cases for 'a period of grace' to allow employers to carry out more pay reviews, he adds.
Trevor Phillips, high-profile chair of the new Equality and Human Rights Commission, went public with his own concerns about the crisis in the tribunals last month. The Equal Pay Act was 'past its sell-by date' and should be replaced with 'new legislation, fit for this century, to help sort out this age-old problem', he said.
Phillips called for the introduction of representative cases and – more controversially – dropped the commission's previous support for the 800 women challenging Redcar & Cleveland council in the 'Bainbridge and others' case, a day before it reached the Court of Appeal. The commission argues that a ruling in the case on transitional arrangements 'could take away the freedom that would allow unions, employers and employees to negotiate sensible, workable solutions'.
Where possible, the hundreds of thousands of equal pay cases should be pulled out of the legal process and dealt with through negotiated agreements, the commission says. Its position is now to back short-term pay protection arrangements, even if these prolong inequality for a limited time, provided that the employer's aim is to eliminate unequal pay as soon as possible.
LGE welcomed the EHRC announcement. But others did not. Cross, who is representing the Redcar women, says: 'Phillips' remarks are an absolute disgrace. The first act of the EHRC is to dump the women who are being discriminated against and support the employers. I just think it's outrageous.'
So sensitive is the case that the commission would not provide a policy officer for interview about equal pay in local government. A spokeswoman said the commission did not want to add to the statements it had already made until the completion of the Bainbridge case.
In the equal pay crisis, everything has a knock-on effect. A major concern raised at the LGE summit was 'a fear of the end of collective bargaining', the LGE spokesman says. Local authorities are concerned that the impact of no-win, no-fee legal challenges could spread beyond equal pay claims. 'How many other activities between unions and councils could unravel in future?' the spokesman asks.
Many local authorities will be keeping a close eye on the dispute in Birmingham to see whether the council succeeds in imposing its new pay structure by sacking and re-employing its workforce. Other councils might then follow the same course, he says, as a 'last-ditch but necessary solution – because it has had to come to this'.
Alan Rudge, Birmingham's Cabinet member for equalities and human resources, argues that the root of the problem is money. He points out that the NHS's Agenda for Change pay shake-up was funded centrally – but councils have been left to deal with the financial consequences of pay reviews largely on their own.
'I have said repeatedly that as the government were so influential in shaping the Single Status Agreement, they should pick up the bill for it,' he says. 'It is outrageous that the Birmingham taxpayer should have to pay and that our staff should not be given the same consideration as those in the NHS.'
Unison has also called on the government to 'fully fund the outcome of [equal pay] reviews to ensure equal pay in the public sector'. It also wants the pay reviews to be mandatory.
So far, government help has been largely in the form of flexibility over capitalisation – allowing councils to borrow or use capital receipts to cover their equal pay costs. In September, the government allocated £500m worth of capitalisation directives and in the wake of the LGE summit, local government minister John Healey confirmed a new round for 2008/09. Progress on equal pay 'varies in different areas', Healey noted, adding: 'I want many more authorities to tackle this in an active and affordable manner.'
LGE and Unison welcomed the extra flexibility, but unease in the town halls remains. The worst-case scenario of a council bankrupted by equal pay will probably not be played out. But Parkinson says she almost regrets local authorities' ability to keep afloat in even the most difficult circumstances.
'In some ways, it would be good if a council did go to the wall. A massive crisis might have made people see things differently,' she says. But the equal pay crisis is not over yet, and no-one knows quite what lies ahead. li
The road is long: one woman's story
Alison Smith (not her real name) joined Cumbria County Council as a home carer in the early 1990s. In a tribunal case launched through Unison in 2003, Smith's pay was compared with that of a road worker — a traditionally 'male' job. The road worker was entitled to unsocial hours payments, overtime pay, callout pay and bonuses — but Smith was not.
The tribunal ruled in Smith's favour, although the council is appealing against the decision. Smith's claim covers the six years before her claim and the time that has elapsed since. The annual shortfall in her pay began in 1997/98 at almost £1,300, rising in one year to almost £4,000 because of additional hours she worked. By April 2006, Smith's claim was worth £29,000, plus interest.
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