Last week Harriet Harman introduced a White Paper entitled ‘Framework for a Fairer Future – The Equality Bill’. The bill is intended to be a unified piece of discrimination legislation, written in accessible language, to ‘declutter’ the existing system of legislation, guidance and codes of practice. The media have shown great interest, focusing on two particular workplace proposals: positive discrimination in favour of under-represented groups, and a ban on clauses that make it unlawful to stop employees from discussing their pay.

The motive for banning pay secrecy clauses is simple. A woman’s full-time pay is, on average, 12.6% lower per hour than a man’s. Women working part-time are paid around 40% less per hour. The White Paper claims that, without transparency, it is difficult to see where unequal pay exists, pay is less likely to be discussed and therefore it is harder for women to challenge an employer who is unlawfully paying them less.

According to research from 2004 quoted by the White Paper, 22% of employers did not permit employees to share information with their colleagues. (Following the publicity generated by the White Paper, perhaps some of the remaining 78% of employers will be tempted to introduce secrecy clauses while they still can!)

It's impossible to measure how effective pay secrecy clauses are. They are difficult for employers to monitor and to police. Rumour has it that one group of highly paid employees circumvented the terms of their particular secrecy clause by agreeing to leave a note of each of their bonuses on the table of a designated meeting room at the same time.

Traditionally, in Britain, asking about money has been considered bad form, and on a par with asking your grandmother how old she is.  This cultural sensitivity probably has greater responsibility for the lack of transparency than the prevalence of pay secrecy clauses. 

The government’s latest proposals stop short of compelling employees to reveal details of their pay. If secrecy clauses are banned, employees who prefer not to tell would no longer be able to fob the inquisitive colleague off with a polite reference to the secrecy clause.  Just like the grandmothers, however, they will be at liberty to fib, tell them to mind their own business or get in a huff.

Reports have suggested that in Norway and Denmark, everyone’s earnings are published and it’s no big deal. Coyness about pay therefore seems to be cultural rather than universal, so perhaps there is scope for indirect race discrimination claims in this area.

The statistics show that there are clearly questions to be answered about the pay gap. Those questions cannot be answered without the transparency that the Equality Bill aims to encourage. 

Of course, few employers opt for pay secrecy clauses just so that they can discriminate between the sexes. There can be lawful reasons for differentiating between the pay of two employees, for example, the retention or recruitment of a person who has threatened to go elsewhere. 

Just because the reason is lawful, however, does not mean that the employee will gracefully accept it, or continue to work ungrudgingly alongside the higher earner. This is particularly so if the reason for the difference is performance related.

There may also be reasons for the overall pay difference between men and women that have nothing to do with discrimination by employers. A (not particularly discrimination-free) reason often suggested is that men are better negotiators. Another reason is that men and women may simply make different career choices for personal reasons unconnected with discrimination.

The Equality Bill is not yet law. It's possible that some, or even all, of the proposals described in the White Paper will not become law.  However, employers can already be required to disclose details of pay differences under existing equal pay laws. In some sectors, customers require contractors to demonstrate a commitment to equal pay as a condition of engagement. 

Employers are therefore advised to conduct equal pay audits and ensure that pay review and bonus decisions need to be recorded with an explanation of the fair, objective and lawful reasons for the decisions taken.

A less-reported proposal within the Equality Bill has the potential to have a greater impact on employers than pay secrecy: strengthened enforcement.

At present, if an employee suffers discrimination, he or she has to find the money, time and resolve to bring a claim in the employment tribunals. If the tribunal finds that the employer has discriminated, it can of course award compensation. Currently, the tribunal can also make recommendations – provided that those recommendations will benefit directly the person discriminated against. If that person has left the organisation, as is more often than not the case, the tribunal cannot made recommendations.

The Equality Bill will:

• allow employment tribunals to make wider recommendations in discrimination cases, with the aim of benefiting the wider workforce and help to prevent similar discriminatory acts occurring in the future. Wider recommendations may include introducing an equal opportunities policy or reviewing policies on pay. If the employer fails to comply and another claim succeeds, the tribunal could take this failing into account in its decision. No detail has been given of how this would fit with the current compensation regime for discrimination cases. 
• address the issue of multiple discrimination claims – where a person has been discriminated against by reason of a combination of characteristics, for example being a black woman, and suffering discrimination not faced by a black man or a white woman. 
• consult on the possibility of enabling representative actions, so that trade unions or the Equality and Human Rights Commission can bring discrimination cases on behalf of a group of individuals. 

This last point could have a dramatic effect on the current employment litigation landscape, in which both parties are well aware of the burden – financial and otherwise – on an individual in taking a discrimination claim to trial. Settlements and withdrawals of claims are frequently based more on these factors than on the merits of the claim.

Increased involvement of the Equality and Human Rights Commission could be particularly significant for employers. The Equal Opportunities Commission (now subsumed by the Equality and Human Rights Commission) had the power to conduct formal investigations where it had come to its attention that an employer was committing unlawful discrimination. That power was rarely exercised, but the process of questioning, investigating and reporting had a significant impact on the targeted employers.

Tell us what you think about the Equality Bill.  If you are already entering into the new spirit of transparency, please feel free to tell us all about your pay.