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Delivering pay equality in Scottish Local Government
The UNISON Scotland Submission to the Scottish
Parliament Local Government and Communities Committee
March 2009
Executive Summary
Thousands of women working for local authorities
receive unequal pay despite the fact that they perform work
of equal value to their male colleagues. Many women live in
poverty as a result. This is unacceptable to UNISON and it should
be unacceptable to the committee.
Single status was intended to resolve the issue
of equal pay but the new arrangements have been imposed on workers
in over 80% of cases. Equal pay is a continuing problem and
UNISON invites the committee to accept the observation that
local government employers in Scotland have some distance still
to travel before they deliver equal pay and, consequently, that
the remaining cost implications are considerable.
UNISON highlights that many employees have been
compensated on two separate occasions. However, the problem
is of a scale and complexity that these compensation arrangements
do not extinguish liability and those same employees may have
additional multiple claims on a continuing basis.
In particular, UNISON draws the committee’s attention
to the likelihood that the single status arrangements imposed
on employees under protest from trade unions contain new and/or
continuing liability. This is unacceptable from an equality
perspective as well as being financially undesirable.
UNISON is pursuing approximately 15,000 claims
in Scotland of which over 7,000 are in local government. The
figure for local government fluctuates according to the trends
in pre-tribunal settlement but the present trend is upward and
is expected to exceed 12,000 by June 2009. The current upward
trend in litigation reflects ongoing disputes over the merit
of pay arrangements imposed by local authorities. UNISON Scotland
has received in excess of 2,000 requests for assistance on equal
pay matters in the first two months of 2009.
UNISON recognises the strength of case management
by the tribunal service. UNISON also recognises that it is appropriate
for public sector employers to mount a robust defence of their
pay arrangements where they have a genuine belief in the merit
of those schemes. However, after three years, the litigation
in Scotland has yet to progress beyond preliminary, procedural
and jurisdictional arguments. There has yet to be a concluded
local authority case and no orders for compensation have been
issued. Speaking for our members – justice delayed is justice
denied.
UNISON suggests that the management and funding
of equal pay settlements is an important issue that has not
received adequate attention to date. Related to this is the
absence of any public debate around the merit of the established
English practice of capitalising equal pay liabilities. However,
UNISON invites the committee to find that the most pressing
priority is to ensure that continuing liabilities are identified
and eradicated. The practice of issuing multiple compensation
payments to the same employees reflects a failure to get to
the root of the problem and this is the issue that should give
greatest cause for concern from both an equal opportunities
and a public spending perspective.
Background
The Single Status Agreement1 was signed in 1999
and it is a framework agreement for local government in Scotland.
The intention behind the agreement was to move the vast majority
of council workers to harmonised terms and conditions alongside
equality proofed pay systems based on job evaluation.
The employers missed the extended implementation
date of April 2004 and the level of litigation has been rising
steadily since that time. The employers presented proposals
for a national matrix for equal pay compensation arrangements
via CoSLA in November 2005 and these were rejected by the trade
unions. Each Local Authority then made direct offers of compensation
to individual employees in the period 2005 and 2006. This episode
was the subject of an inquiry by the Finance Committee of the
Scottish Parliament which reported in March 2006.2
It is significant to note that at the time of
this first phase of compensation payments the majority of councils
had not implemented job evaluation. Although compensation was
paid under a compromise agreement or the ACAS conciliation procedure,
under which employees renounced their equal pay rights, the
effect of these agreements is time limited. In due course the
agreements expired and in the continuing absence of new pay
and grading arrangements the past liabilities re-emerged.
With the recurrence of equal pay liabilities in
the period 2006 to 2008 the majority of Local Authorities made
a second round of compensation offers direct to employees in
the period 2008/09. Compensation was paid under compromise agreements
or ACAS conciliation and, once again, the effect of those agreements
is time limited. The question for the committee is whether there
is a risk that a third or even fourth round of compensation
may require to be paid.
For example. At its meeting on 12th March
2009 the City of Edinburgh Council will consider a proposal
to enter a third round of equal pay compensation payments to
low paid women.3
This question of recurring liabilities has never
been adequately investigated and it was first highlighted in
UNISON evidence to the Equal Opportunities Committee in September
2008.4 It is essential to note that introduction of a non-discriminatory
pay system based on job evaluation is the only way to bring
continuing liabilities to an end. UNISON recognises 26 Scottish
local authorities make the public assertion that they have reached
this goal and we acknowledge that significant progress has been
made. However, there are major problems in many of the new pay
systems and this cannot be overlooked.
Continuing Liabilities
Single status implementation has been slow. Although
26 authorities have implemented some form of job evaluation
only six achieved this by collective agreement.
1 http://www.unison-scotland.org.uk/localgovt/singlestat.html
2 http://www.scottish.parliament.uk/business/committees/finance/reports-06/fir06-04-01.htm
3http://cpol.edinburgh.gov.uk/getdoc_ext.asp?DocID=123694
4http://www.scottish.parliament.uk/s3/committees/finance/reports-08/fir08-07-vol2-02.htm#annf#annF
In over 80% of cases UNISON recommended that its
members reject the employers’ proposals because of concerns
over continuing discrimination.
The committee will be concerned to hear that in
some cases single status has actually widened the pay gap between
women and men. In other cases, whilst the gap has reduced, it
remains significant and of concern.
In July 2008 the Court of Appeal delivered a significant
decision on the application of the Equal Pay Act to new pay
systems ("Bainbridge"). Although job evaluation tends
not to have a radical effect on the majority of employees there
tends to be a minority group who benefit from re-grading and
a corresponding group who lose. There is a common practice adopted
by employers whereby the financial gains and losses resulting
from a pay review are phased in over a relatively short period
of time. In the specific cases before the Court of Appeal the
court found that these transitional arrangements delayed the
arrival of gender equality and the disadvantage of this delay
accrued to women in a manner that was disproportionate and unjustifiable.
The House of Lords has declined to hear an appeal.
This type of Bainbridge liability occurs after
the implementation of job evaluation. However it is just one
possible source of ongoing or continuing liability in new pay
arrangements.
The precise implications of this decision for
individual authorities in Scotland are unclear. However it is
likely that this decision will give rise to additional claims
as employees challenge new pay arrangements.
The 2008/2009 Budget Process
The Equal Opportunities Committee made some astute
observations in their budget report (see above)
They recognised the injustice of unequal pay and
the direct and indirect cost to the public sector and wider
Scottish economy. They recognised the apparent failure of the
wider regulatory framework to influence the course of events.
In particular they noted the apparent failure of Audit Scotland
to identify adequately the risks associated with these contingent
liabilities.
The members of the Committee highlighted the importance
of the gender equality duty in the active management of discrimination
and the associated financial liabilities. The Local Government
Scotland Act 2003 includes elimination of discrimination in
the definition of Best Value and it is therefore of concern
to UNISON that Audit Scotland, who audit the Best Value regime,
have played such a peripheral role in addressing pay discrimination.
Critically, the Committee drew attention to the
absence of an impact assessment within the budget process and
the decision of the finance minister not to make specific additional
provisions for equal pay costs. It is UNISON’s view that an
equality impact assessment within the budget processes is an
essential requirement.
UNISON were surprised and disappointed that both
Audit Scotland and CoSLA declined to attend the round table
discussion with the Equal Opportunities Committee. They have
since given evidence to the committee on 24th February
2009 and this gives rise to further concerns.
Evidence of Audit Scotland
In evidence to the Equal Opportunities Committee
on 24th February Audit Scotland indicated, among
other things, that:
"It is not our business to take a view on
policy matters or on the extent to which councils meet their
statutory requirements"
"The bulk of equal pay payments were made
by local authorities in 2005-06, and they have continued to
address the situation by making payments. Some authorities have
largely settled the matter by agreeing their single status pay
structures, but they still recognise that a potential liability
exists."
"Everyone has their eye on the Redcar and
Cleveland Borough Council v Bainbridge case that is taking place
down south, which has possible implications for Scottish local
authorities. I believe that the case is now at the Court of
Appeal in England. If the court finds in favour of Bainbridge,
rather than the local authority, that will have implications
for our councils, which have also made compromise agreements
as part of their equal pay negotiations."
"This year, when we are talking to councils,
we will ask them whether they have considered the potential
impacts of the Bainbridge case. By the time we get to that discussion,
the outcome of the case will be known. If the outcome is not
in Redcar and Cleveland Borough Council’s favour, we expect
councils to make some reference to that in their annual accounts.
That kind of risk assessment should feature in the financial
statements."
"We do not consider whether one scheme is
inherently more risky than another. I could not say, for example,
whether more claims are generated in a council where a system
has been imposed than in one where the system has not been imposed."
"The approach is not so much one of risk
assessment as one of verifying that the figures in the financial
statements are correct and that legitimate payments have been
made. That is the extent of our interest."
"The buck stops with the local authorities.
We do not have control over what they do or how they do it.
Our responsibility is to highlight the areas in our remit. Equal
pay is clearly an important area because there is legislation
behind it and there are implications for the accounts, so we
take the appropriate audit action."5
In UNISON’s respectful submission, these contributions
indicate an omission or oversight on the part of Audit Scotland.
Local Authorities in Scotland have a statutory duty under the
Local Government Scotland Act 2003 to deliver Best Value and
assessing Best Value compliance is the statutory responsibility
of Audit Scotland. Best Value is defined by section one of the
2003 Act and is summarised in Ministerial guidance as follows:
-
to make arrangements to secure continuous
improvement in performance (while maintaining an appropriate
balance between quality and cost); and
-
in making those arrangements and securing
that balance, to have regard to economy, efficiency, effectiveness,
the equal opportunities requirements and to contribute to
the achievement of sustainable development;6
5 http://www.scottish.parliament.uk/s3/committees/equal/or-09/eo09-0302.htm#Col823
6 http://www.scotland.gov.uk/Publications/2004/04/19166/35250
The guidance goes on to state that an authority
which secures Best Value will be able to demonstrate:
- • a culture which encourages both equal opportunities
and the observance of the equal opportunities requirements;
- • measures are in place to meet the UK-wide equal opportunities
requirements e.g. Equal Pay Act 1970 Sex Discrimination
Act 1975 Race Relations Act 1976 as amended by the Race
Relations (Amendment) Act 2000 Disability Discrimination
Act 1995
and all relevant subordinate legislation made
under these Acts;
- • adoption of the meaning of "equal opportunities" as
is set out in Schedule 5 to the Scotland Act 1998, namely,
"the prevention, elimination or regulation of discrimination
between persons on the grounds of sex or marital status,
on racial grounds or on grounds of disability, age, sexual
orientation, language or social origin or of other personal
attributes, including beliefs or opinions, such as religious
beliefs or political beliefs";
More specifically, section 59 of the 2003 Act
states "The Scottish Ministers, local authorities, the
authorities, bodies, office holders and other persons mentioned
in section 16(1) of this Act and any other person discharging
functions under this Act shall discharge those functions in
a manner which encourages equal opportunities and, in particular,
the observance of the equal opportunity requirements."
Reading the Audit Scotland evidence in the context
of the Best Value rules, UNISON Scotland makes the following
observations.
- • Unlike the competitive tendering regime it replaced,
the Best Value rules look beyond the balance sheet and define
high quality public services with reference to a number
of additional factors including equal opportunities.
- • Equal opportunities sit alongside economy, efficiency
and effectiveness as a key factor to which local authorities
must have due regard. The 2003 Act says, in terms, that
an authority delivering Best Value will eliminate discrimination
and promote equality.
- • In our submission, the fact that Best Value is defined
in this way demands a corresponding change in the methodology
adopted by Audit Scotland. It is no longer adequate to assess
unequal pay as a contingent liability and a financial risk.
Best Value is multi-dimensional. A serious, systemic breach
of anti discrimination law is in-itself a failure to deliver
Best Value as defined by the Scottish Parliament in 2003.
There is no need for a contingent liability to crystallise
in the form of equal pay compensation for it to trigger
an alarm bell at Audit Scotland – Best Value requires evidence
of robust anti-discriminatory practice and the active promotion
of equality.
The question is whether the methodology adopted
by Audit Scotland enables the commission to make this type of
assessment.
With respect, it appears from the evidence of
24 February 2009 that Audit Scotland is struggling to keep track
of basic financial risks far less engage with the wider definition
of Best Value.
Contrary to the impression created by Audit Scotland
the English case of Bainbridge v Redcar & Cleveland Borough
Council is not a live case. There is no point in waiting for
an outcome favourable to local authorities. The matter was concluded
in 2008.
The financial implications for local authorities
vary from case to case but we estimate that Bainbridge liabilities
will run to several hundred million pounds. That is in addition
to the previous projected cost of equal pay of £500 million.
It comes as something of a shock to UNISON that Audit Scotland
are unaware of the legal parameters local authorities are required
to work within.
But there is a wider question about the Best Value
regime and the extent to which local authorities and Audit Scotland
have moved beyond balance sheet auditing and engaged with the
equality targets embedded in the Best Value regime.
The Audit Scotland evidence to the Equal Opportunities
Committee gives the clear impression that the Commission views
its remit as stopping short of an assessment of the quality
of anti-discrimination measures adopted by Local Authorities.
And yet the ministerial guidance states that a local authority
that delivers Best Value will be able to demonstrate measures
to eliminate unlawful discrimination. In our view, no assessment
of Best Value can be complete without an external and objective
assessment of a council’s compliance with discrimination law
including the Equal Pay Act. The duty to make that assessment
rests with Audit Scotland.
Audit Scotland should therefore be asked to review
their audit methodology to ensure that they are auditing for
equality as well as auditing for financial risks that might
arise from existing inequality. The Best Value rules require
nothing less.
No Win No Fee Solicitors
One important feature of the Equal Pay landscape
is the presence in Scotland of an English law firm who operate
on a contingent fee basis – so-called No-Win-No-Fee. The background
to this type of legal service lies in the civil legal services
system in England and Wales. Damages based contingency fees,
where the claimant pays their solicitor directly from their
damages typically through a percentage claw back, are barred
in England and Wales apart from in the Employment Tribunals.
This is a result of a legal quirk as Employment Tribunal proceedings
are defined as non-contentious. No such system has been adopted
in Scotland where contingency fees are unlawful.
In addition to the contingency fee the Cross &
Co arrangement includes a penalty clause under which people
who elect not to use the services of Cross & Co are required
to pay a charge of £500 for every six months the arrangement
has been in place.
In 2008 UNISON was approached by Ms J Quinn, a
UNISON member who was also a client of Stefan Cross and Co.
Ms Quinn had received a letter from Cross and Co threatening
legal action against her in the English County Court. With assistance
from UNISON the matter was placed before the Court of Session
in Edinburgh. The Court found that there were two aspects of
the Cross and Co arrangement that were unlawful – the contingent
fee and the penalty clause.
UNISON recognises that access to justice is a
complex issue and that unmet legal needs are best addressed
through a diverse range of legal service providers. UNISON has
a long history of partnership working with law centres, advice
agencies, CAB, and the equalities commissions and it is important
that the work of these agencies is not curtailed. On the contrary,
UNISON made a significant financial contribution to the first
mass litigation campaign for equal pay in 1994 when significant
funds were granted to Scottish Low Pay Unit.
However, the specific activities of Cross &
Co, as illustrated by the Quinn case, raise some worrying questions.
- • It is not known how many times Cross & Co have relied
on this unlawful contingency clause to deduct money from
local authority employees.
- • Nor is it clear how frequently legal action has been
threatened against workers in a manner similar to that experienced
by Ms Quinn.
- • Finally, there is no central record of the number of
occasions on which local authorities have paid legal fees
directly to Cross and Co by reference to this unlawful arrangement
For the future, it is to be hoped that Cross &
Co draw this issue to the attention of their clients, withdraw
any threats of Court Action in England and amend their business
practices to reflect the requirements of Scots law.
The primary issue at stake here is the protection
of low paid workers as consumers of legal services. However
there is a related issue which members of the committee may
wish to consider. It is important that Scottish workers have
the right and the freedom to make a legal complaint against
their employer if they believe an unlawful act has taken place.
However, it is also important for workers, and the wider public,
that workers are free to reach an informed decision about pre-litigation
settlement without fear that they will be subject to unlawful
penalty charges for settling against the wishes of their legal
adviser.
The Way Forward
There are a variety of issues the committee may
wish to consider in charting an effective course towards equality
in local government pay and stability in local government finance.
- Law Reform
The Local Government Committee meets at an opportune
time. Discrimination law is reserved to Westminster and the
UK Government are about to publish the results of their review
of discrimination law in the new Equality Bill.
UNISON is calling for measures to streamline and
accelerate the passage of equal pay claims. Unequal pay is a
structural or systemic problem linked to longstanding societal
assumptions about the value of the different work performed
by women and men. It is a cruel and sadistic logic that requires
each individual woman to prove she has experienced injustice
when large groups of women have a shared experience of discrimination.
We need representative actions to enable discrimination to be
tackled efficiently and effectively.
The Gender Equality Duty will also be reformed.
This ground breaking requirement on employers to adopt a proactive
approach to the elimination of discrimination is at risk. As
the Finance Minister found during the budget scrutiny by the
Equal Opportunities Committee it can be challenging to face
the simple question – "what positive steps have you taken
to eliminate pay discrimination?".
Several Scottish councils have conducted equality
impact assessments on their single status proposals only to
find that the new arrangements actually widen the pay gap between
women and men. For the Gender Duty to be effective there must
be a requirement that employers use the results of these audits
to actually tackle discrimination under threat of meaningful
enforcement action.
UNISON’s full agenda for law reform is set out
in the attached Equality Bill briefing and we invite the Committee
to endorse the measures in relation to equal pay.7
- Auditing
If the Committee accepts the UNISON submission
on this point then the Best Value rules place an additional
duty on Audit Scotland and that is a duty to audit for equality.
The Best Value rules require auditors to equip themselves with
the ability to make an independent assessment of the equality
measures adopted by Scottish councils.
Auditing for equality in a Best Value context
therefore requires a new audit methodology, possibly based on
a partnership with other relevant agencies such as the EHRC.
- Capitalisation
Since 2006, councils in England and Wales have
been granted permission to borrow against or sell assets to
the tune of over £1billion to help meet the costs of equal pay.
On the 3rd of March 2009 the Minister for Local Government
in England and Wales announced the third round of capitalisation
to assist councils with the management of equal pay costs. No
such facility has been made available in Scotland.
On 23rd January 2008 John Swinney,
Scottish Finance Secretary, told the Scottish Women’s Budget
Group that he was examining the merit of capitalisation as on
option for Scottish Local Authorities.
UNISON’s position is that it is preferable to
manage equal pay liabilities without recourse to capitalisation
where possible but capitalisation should be made available as
an option where specific criteria are met.
There are some authorities for example who have
yet to implement single status and who face several hundred
equal pay claims. These type of exceptional circumstances might
merit consideration under a capitalisation scheme.
Conversely, there are some authorities who implemented
single status some time ago but took no account of the Bainbridge
principles set out in August 2008. The passage of time has denied
these authorities the type of flexible response to Bainbridge
afforded to late implementers and it is possible that capitalisation
might assist in managing these liabilities.
The specific requirements attached to a capitalisation
scheme require detailed consideration. However, the most important
requirement is a copper bottomed guarantee that the liabilities
subject to capitalisation will not recur. Elimination of liabilities
arising from unequal pay can only be delivered by an equality
proofed pay system envisaged by the Best Value Guidance and
it would be prudent to insist on independent verification that
equality has been achieved.
7 http://www.unison.org.uk/equality/pages_view.asp?did=8197
Conclusion & Recommendations
There is no doubt that considerable efforts have
been made since the Finance Committee reported on Single Status
in 2006. However, the present situation is unsatisfactory for
a variety of reasons and the Committee should take the following
steps:
- • Press the Finance Secretary to reconsider the funding
required to close the pay gap.
- • Press the Finance Secretary to establish capitalisation
as a finance option and set out criteria against which applications
can be made.
- • Press the Chancellor and the Finance Secretary to permit
local authorities to offset equal pay costs, in whole or
in part, against their share of the £5 billion efficiency
target.
• Set a timetable for local government to
implement single status in a way that eliminates discrimination
and brings the repeated rounds of equal pay compensation
to an end.
- • Support the UNISON case for Equal Pay law reform during
the passage of the forthcoming Equality Bill.
- • Consider measures to ensure that equal pay claimants
can obtain access to justice free from the unlawful threats
of court action.
- • Invite Audit Scotland to review its Audit Methodology
in a way that gives equality auditing the weight that is
required by the Best Value regime.
UNISON Scotland are grateful for the opportunity
to assist the committee with its work on equal pay and we are
happy to provide further assistance if required.
Glyn Hawker
Scottish Organiser - Bargaining & Equal Pay
UNISON Scotland
March 2009
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