Same Job Different Pay: Is it Illegal in the UK?

In the UK, equal pay laws are designed to ensure that employees performing the same or similar work receive the same pay, regardless of their gender or other protected characteristics. Under the Equality Act 2010, it is generally illegal to pay employees differently for the same job if the disparity is based on gender, race, age, or other protected characteristics. The Act enshrines the principle of “equal pay for equal work,” meaning that men and women in the same employment, doing the same job or work of equal value, should receive the same pay.

However, there are circumstances where different pay for the same job may be lawful. Employers can justify pay differences if they are based on factors unrelated to discrimination, such as experience, qualifications, performance, or market conditions. For instance, an employee with more experience or higher qualifications may justifiably be paid more than a colleague in the same role.

If an employee believes they are being unfairly paid compared to someone doing the same job, they can raise a grievance or bring an equal pay claim to an employment tribunal. Employers must ensure that any pay differences are clearly justified and documented to comply with the law and avoid potential claims for unlawful discrimination.

In this guide, we look at the law on equal pay, and when equal pay for equal work doesn’t apply.

 

Section A: Is Same Job, Different Pay – Is It Illegal in the UK?

 

Under the provisions of the Equality Act 2010, both men and women are entitled to get the same pay and contractual benefits for doing comparable work. These provisions are there to protect individuals from discrimination and bias at work by reason of their sex, and apply equally to male and female employees, although historically women have been paid less than men for doing the same or equivalent work.

Where the work is deemed to be equal, the Act implies a sex equality clause into the employee’s contract of employment, modifying it where necessary to ensure that their pay and all other contractual terms are no less favourable than anyone of the opposite sex doing the same or similar job. The equal pay provisions apply to all contractual terms including wages, non-discretionary bonuses, holiday pay, sick pay, overtime and occupational pension benefits, as well as to non-monetary terms, such as leave entitlements or access to sports and social benefits.

However, there are certain circumstances in which an employer can justify any differences in pay, provided they can show that there is a material reason for the difference which does not discriminate on the basis of gender. This is known as the ‘material factor’ defence.

In the context of an equal pay claim, where a person doing equal work is able to show that they are receiving less pay or other less favourable terms in their employment contract, or identifies a contract term from which a comparator benefits and they do not, the employer will be required to show the reasons for this.

If the employer is unable to demonstrate that the difference is due to a material factor that has nothing to do with the sex of the comparator or complainant, then the equality clause will take effect and the employee’s claim is likely to be upheld.

 

Section B: Can Two Employees Doing the Same Job Earn Different Pay?

 

It is not necessarily illegal for two employees doing the same or similar job to earn different pay, provided the employer can justify any difference in pay or other contractual benefits on the basis of a reason, or reasons, wholly unrelated to the gender of the jobholders.

However, the employer must be able to show that any material factor relied upon doesn’t discriminate against the complainant, either directly or indirectly because of their sex. A material factor will be directly discriminatory where it is based on treating men and women differently because of their sex. Indirect discrimination arises where a pay system, or workplace policy or arrangement, has a disproportionate adverse impact on female employees compared to their male comparators, or vice versa. If the employer cannot objectively justify the pay system, policy or arrangement, the material factor defence will not be made out.

A directly discriminatory material factor cannot provide any defence to an equal pay claim, and it is not open here to an employer to provide objective justification. In contrast, an employer can justify an indirectly discriminatory factor, where this has been alleged, but only by showing that it’s a proportionate means of achieving a legitimate aim.

If a person isn’t being paid equally for the same or similar job, their employer will be breaking the law, unless the employer can show that the difference in pay or other terms is genuinely due to a material factor that is not related to the gender of the jobholders. Still, gender isn’t always the reason why an employee is getting lower pay when compared to other employees.

 

Section C: Justifying Differences in Pay

 

Where there are differences in pay or other terms, to successfully defend a claim an employer must identify the material factor(s) relied upon and be able to prove the following:

 

a. Genuine grounds: It is the actual reason(s) for the difference in pay rather than a sham or pretence.

 

b. Direct causation: It is causative of the difference in pay between the complainant and their comparator.

 

c. Material: The reason is material, ie, relevant and significant to the difference, and

 

d. No discrimination: It doesn’t involve either direct or indirect sex discrimination.

 

This essentially means that even where an employee is able to identify a comparator at work who is better paid than them, or who works under more favourable contractual terms, these differences might be permitted, provided the employer can satisfy the four conditions above.

Any personal differences between the employees concerned, such as expertise and experience, may be material factors. In this context, an employer could argue that it was necessary to pay someone else more because of a staff shortage, provided they can prove difficulties in either recruiting or retaining staff to do the job being done by the higher-paid person.

Other examples of material factors could include geographical differences to reflect a higher cost of living in different areas. They could also include things like someone working unsocial hours, rotating shifts and night-working. For instance, if an employer can show that the only way to ensure adequate staffing of unsocial hours is to pay a shift premium, even if more men than women work those shifts and therefore receive the additional payments, the material factor defence may succeed.

In these circumstances the employer can justify an indirectly discriminatory factor by showing that it’s a proportionate means of achieving a legitimate aim.

In contrast, where employees’ pay is structured on the basis of success in building client relationships, using as one of the key indicators of that success the number of functions attended out of hours, it is unlikely this system can be objectively justified taking into account the disadvantage to women who typically have more childcare responsibilities.

However, there is no defined list of legitimate aims. As such, whether or not a particular pay practice or policy pursues a legitimate aim, and the means to adopt that aim are proportionate in all the circumstances, will depend on the specific circumstances and facts of the case.

 

Section D: Equal Pay for Equal Work Test

 

In most instances, people doing the same or similar job, or work of equal value, should get equal pay, regardless of their gender. That said, there are still cases where people are paid differently for the same or equivalent work, even though the law says they should be paid the same. In some of these cases, an employer may be able to prove that any pay difference is genuinely due to a non-discriminatory material factor. The employer may also be able to argue that the complainant and their comparator are not actually doing equal work.

In the context of a claim for equal pay, the ‘equal pay for equal work test’ is essentially used to determine whether or not any comparator of the opposite sex is in fact undertaking the same or equivalent work. Under the 2010 Act, ‘equal work’ counts as either:

 

a. work that is the same or broadly similar, provided any differences are not of practical importance (this is known as ‘like work’)

 

b. work that is rated under the same job evaluation scheme as being work of equal value (this is known as ‘work rated as equivalent’)

 

c. work that’s different but of equal value in terms of factors such as effort, skill and decision-making (known as ‘work of equal value’).

 

Under the ‘equal pay for equal work’ principle (or ‘equal pay for same job’), provided the complainant and comparator are deemed to be doing the same or equivalent work, and absent any material reason for any contractual differences, they must get the same pay and benefits.

 

Section E: Equal Pay Claims

 

If an employee has reason to believe they are subject to inequality of pay on gender grounds, they will be legally permitted to ask other members of staff about how much they earn and what benefits they get. The 2010 Act limits the enforceability of what are often called secrecy or gagging clauses that some employers use to restrict any discussions about pay packages and differentials.

An employee is also entitled to ask their employer directly for general information about other people’s pay and contractual benefits, and the reasons for any differences, although the employer will be required to preserve the anonymity and confidentiality of other employees for data protection reasons. If the employer fails to answer the employee’s questions within a period of eight weeks, or answers in an evasive or equivocal way, a tribunal can draw an inference, including an inference that the employer is in breach of the equal pay provisions.

If, having made inquiries and drawn comparisons, an employee is able to identify someone at work of the opposite sex or even someone who used to work for the same employer, who was paid more for the same job, or benefitted from more favourable terms and conditions, they may have a potential claim for equal pay. In these circumstances, employees are advised to discuss the matter first with their employer, but if the matter cannot be resolved informally, to raise a formal grievance in writing using their employer’s internal grievance procedure.

In cases where an equal pay issue cannot be resolved internally, the employee can then go on to issue tribunal proceedings, although they will first be required to notify ACAS that they intend to bring a claim through the ACAS early conciliation procedure. Only after this stage has been exhausted can the matter will proceed to a tribunal hearing for determination on the facts.

In cases where an employee is doing the same job as someone of the opposite sex but for different pay or terms, provided the work is equal, the tribunal will have regard to whether or not there are any material factors that have resulted in this difference. Unless the employer can prove that there’s a non-discriminatory material factor to explain any difference, or be able to objectively justify any indirectly discriminatory factor, the claim will be upheld.

Further, if any material factor accounts for only part of the difference in pay or benefits, the claim can still be upheld to the extent to which any difference is attributable to someone’s sex.

 

Section F: Summary

 

Section G: Need Assistance?

 

DavidsonMorris’ business employment law specialists provide advice to employers on all aspects of workplace equality, including equal pay. Working closely with our HR colleagues, we can support with reviewing and developing internal policies and practices to ensure compliance with equality legislation and any applicable reporting obligations, while protecting your commercial interests. If you have a specific question about or scenario relating to paying people different salaries for similar, or the same, work, speak to us.

 

Section H: Same Job, Different Pay FAQs

 

Can a company pay different wages for the same job?

It may be legal for a company to pay different wages for the same or similar job, but only if there are non-discriminatory material factors which explain the reason for the difference.

 

What is meant by equal pay for equal work?

Equal pay for equal work refers to the right under the Equality Act 2010 for both men and women to get the same pay and contractual benefits for doing comparable work, unless any difference in pay can be objectively justified.

 

Can you be paid less for doing the same job?

It may be lawful to be paid less for doing the same job, provided your employer is able to show a material factor that explains the reason for doing this and that factor is wholly unrelated to your sex.

 

What is the Equal Pay Act 2010?

The provisions on equal pay are set out under the Equality Act 2010. This replaced the previous legislation, including both the Equal Pay Act 1970 and Sex Discrimination Act 1975, plus the equality provisions in the Pensions Act 1995.

 

Is it illegal to pay two employees differently for the same job?

In the UK, paying employees differently for the same job can be illegal if the difference in pay is due to a protected characteristic, such as gender, under the Equality Act 2010. However, pay differences may be lawful if they are based on factors like experience, performance, or location.

 

What is considered ‘equal work’ under UK law?

‘Equal work’ refers to work that is the same or broadly similar, work rated as equivalent under a job evaluation scheme, or work of equal value in terms of effort, skill, and decision-making. Employees performing equal work should receive equal pay unless there is a valid reason for any differences.

 

How can an employer justify paying different wages for the same job?

Employers can justify different wages if the disparity is based on legitimate factors unrelated to discrimination. These factors might include differences in experience, qualifications, performance, or market conditions in different locations. Employers should document these reasons to avoid legal challenges.

 

What should I do if I believe I am being paid unfairly?

If you believe you are being paid unfairly compared to someone doing the same job, you can raise the issue with your employer, possibly through a grievance procedure. If the issue is not resolved, you may be able to make an equal pay claim to an employment tribunal.

 

Are there any legal protections against pay discrimination?

Yes, the Equality Act 2010 provides legal protections against pay discrimination based on protected characteristics, such as gender, race, or age. Employees have the right to receive equal pay for equal work, and employers must ensure their pay practices comply with the law.

 

How does gender pay gap reporting relate to equal pay?

Gender pay gap reporting requires certain UK companies to publish data on the difference in average pay between male and female employees. While this reporting focuses on average pay across the organisation, it highlights potential issues with pay equity, encouraging employers to address any disparities.

 

What are the potential consequences for employers who violate equal pay laws?

Employers who violate equal pay laws may face legal claims from employees, leading to financial penalties, reputational damage, and the requirement to adjust pay practices. It’s essential for employers to conduct regular pay audits and ensure compliance with equal pay regulations.

 

Can bonuses or other benefits be different for employees in the same role?

Bonuses and benefits can vary if the differences are based on non-discriminatory factors, such as performance or length of service. However, these differences must be justified and consistently applied to avoid allegations of discrimination.

 

How can employers ensure they comply with equal pay laws?

Employers can ensure compliance by conducting regular pay audits, maintaining transparent pay policies, and documenting the reasons for any pay differences. Providing training on equal pay and discrimination laws to HR and management can also help prevent issues.

 

Section I: Glossary

 

 

Term	Definition
Equal Pay	The legal requirement that employees performing the same or equivalent work should receive the same pay, unless there is a valid, non-discriminatory reason for any difference.
Equality Act 2010	A UK law that protects individuals from discrimination in the workplace and wider society, including provisions for equal pay.
Equal Work	Work that is the same or broadly similar, work that has been rated as equivalent under a job evaluation scheme, or work of equal value in terms of skill, effort, and responsibility.
Job Evaluation Scheme	A systematic process used by employers to assess the value of different jobs within an organisation to ensure fair and consistent pay structures.
Protected Characteristic	Attributes protected by the Equality Act 2010, such as gender, race, age, disability, and religion, which cannot be used as a basis for pay disparity.
Pay Audit	An analysis conducted by employers to review pay practices within the organisation and identify any unjustified pay disparities.
Gender Pay Gap	The difference in average pay between male and female employees within an organisation, typically expressed as a percentage of male earnings.
Equal Pay Claim	A legal action taken by an employee who believes they are not receiving equal pay for equal work, typically brought before an employment tribunal.
Employment Tribunal	A legal body in the UK that resolves disputes between employers and employees, including claims related to pay discrimination.
Statutory Excuse	A legal defence that employers can use to show that they acted in compliance with employment laws when making decisions, such as those related to pay.
Discrimination	Unfair treatment of an individual based on a protected characteristic, which can include paying an employee less for the same work due to their gender, race, or other protected attributes.
Performance-Based Pay	A system where an employee’s pay is linked to their job performance, which can justify differences in pay between employees in the same role.
Market Conditions	Economic factors, such as supply and demand for certain skills or roles, that may influence pay levels and justify pay differences between employees.
Grievance Procedure	A formal process within an organisation for employees to raise concerns or complaints, including issues related to pay disparity.
Bonuses and Benefits	Additional compensation or perks provided to employees, which can vary based on performance, length of service, or other factors, as long as they are applied fairly.

 

 

Section J: Additional Resources

 

UK Government – Equal Pay: Advice and Guidance
https://www.gov.uk/guidance/equal-pay-advice-and-guidance
Provides comprehensive information on the legal requirements for equal pay under the Equality Act 2010 and advice for both employers and employees.

 

ACAS – Equal Pay
https://www.acas.org.uk/equal-pay
Offers guidance on understanding and implementing equal pay in the workplace, including handling equal pay claims and conducting pay audits.

 

Equality and Human Rights Commission – Equal Pay Code of Practice
https://www.equalityhumanrights.com/en/advice-and-guidance/equal-pay
Provides detailed information on the legal framework for equal pay, practical steps for employers, and how to address pay disparities.

 

UK Government – Gender Pay Gap Reporting
https://www.gov.uk/guidance/gender-pay-gap-reporting-overview
Explains the requirements for gender pay gap reporting in the UK, including how to report, who must report, and how to understand the results.

 

Citizens Advice – Discrimination at Work
https://www.citizensadvice.org.uk/work/discrimination-at-work/
Offers advice for employees on how to recognise and address discrimination at work, including pay discrimination and how to make an equal pay claim.

 

Chartered Institute of Personnel and Development (CIPD) – Pay and Reward
https://www.cipd.co.uk/knowledge/fundamentals/people/pay
Provides resources and best practices for employers on managing pay and rewards, including ensuring fairness and compliance with equal pay laws.