Pay secrecy ban could lead to wave of discrimination claims

Employers in the private sector are being urged to brace themselves for a possible “wave of discrimination claims” as ‘equal pay firms’ may seek to cash in on the abolition of pay secrecy clauses.

From October, the Equality Act will render pay secrecy clauses unenforceable, and employers will not be able to prevent staff disclosing salary information provided it is to establish pay discrimination.

The ban on so-called ‘gagging clauses’ has been welcomed by diversity campaigners, and in particular women in the City who have long felt that they were paid significantly less that their male colleagues.

The move is designed to enable workers to ‘seek’ pay disclosure from colleagues in order to stamp out salary discrimination in the workplace.

However, apart from direct competitors, it appears that the Act will allow workers to disclose salary details to anyone whose enquiry is based on establishing pay discrimination, which according to David Carmichael, partner at law firm Pannone, has the potential to open the floodgates to mass equal pay claims.

David said: “Many employers will not realise that anybody can ask their employees for information if they are attempting to uncover discrimination. This could lead to a new wave of claims by so-called ‘equal pay specialists’.

“Recent years have seen these ‘equal pay firms’ target the public sector – urging everyone from dinner ladies to teaching assistants – to make pay discrimination claims. These firms have now pretty much exhausted the public sector and the market has reached saturation point.

“However, the Equality Act and abolition of pay secrecy clauses will now pave the way for these firms to target big businesses in the private sector, many of which may be vulnerable to equal pay claims.

“Similarly, employees will be protected if they divulge their pay terms to journalists who are attempting to discover discrimination across various industries.

“Employees often tend to do nothing if they are on their own. However, with these types of claims, there is an element of strength in numbers. Specialist equal pay firms contact large numbers of people and have a reputation for bringing group claims, therefore private sector employers need to brace themselves for a wave of discrimination claims.”