What counts as a term relating to pay for equal pay purposes?

The Equal Pay Act 1970 inserts an equality clause into every employment contract, such that where a particular 'term' is less favourable to a woman than a man, it shall be automatically improved so that it is equally favourable. In this case, employees doing different jobs - but rated as equivalent - received different entitlements to fixed bonus payments and additional allowances for good attendance.

The Employment Appeals Tribunal (EAT) had to decide whether the bonus and attendance allowance entitlements in the comparators' contracts constituted separate 'terms' or whether they were part of a single 'term' dealing with pay. The EAT held that the fixed bonuses and attendance allowances were payable for performance of contractual duties during normal working hours and, as such, were payable as part of an overall 'term' of the contract dealing with pay.

For the purposes of an equal pay comparison, all the different payments needed to be aggregated and an hourly rate calculated on the basis of the aggregate total pay divided by the hours normally worked.

In reaching the conclusion that all the various payments amounted to a single 'term' relating to pay, the EAT stressed the importance of the fact that the payments were all payable simply for performing contractual obligations during normal working hours. It would be surprising if a similar approach could be adopted for bonuses conditional upon other factors, such as individual performance.
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