Nathaniel Barber traces Birmingham City Council’s history of pay discrimination in Solicitors Journal

Senior Associate Nathaniel Barber discusses the equal pay claims surrounding Birmingham City Council and what they mean for councils across the country in an article for Solicitors Journal.

Nathaniel’s article was published in Solicitors Journal, 3 January 2024, and can be found here.

Paying women and men equally for doing equal work is a concept which should be hard-wired into the structures of every public body and private company. It is a basic predicate to a society which values the work of men and women equally. There is absolutely nothing new about a fundamental principle which goes to the very core of equality in the workplace and it is a notion that has rightly been standard practice for employers for decades.

Yet, despite seeming so blatantly obvious, the well-publicised crisis at Birmingham City Council demonstrates that pay discrimination is somehow still rife in the modern age. Although Birmingham has the largest city council in Europe – and knew of the equal pay issue for many years – the authority nevertheless failed to take adequate steps to stamp out its discriminatory pay structures. This situation has resulted in the City Council being forced to pay a total bill of £1.1 billion over the last decade, causing government administrators to impose direct rule over the country’s second city.

The case should act as a warning signal to all councils that failing to act on fair pay can set a course for bankruptcy.

The background to equal pay legislation

Councils, like all other employers across the country, have had years to put their house in order when it comes to treating male and female employees equally in terms of pay and other working conditions. The ground-breaking Equal Pay Act was introduced in the United Kingdom in 1970, forbidding employers to discriminate on the basis of gender and at last doing away with historical injustices which had no place in the modern age.

The rationale and justification for the Equal Pay Act had been mooted since the early 1960s by various politicians, but it took the Ford sewing machinists’ strike of 1968 to finally spur the government into belated action to address the issue. The strike at Ford’s Dagenham plant was triggered by management informing female sewing workers that their jobs were being regraded, and that as a result they would be paid 15 per cent less wages than their male counterparts. The striking workers’ fight for equal rights captured the attention of the entire country, with their struggle encapsulating a growing desire for change and equality that had long been ignored by Parliament.

While the strike was partially successful in increasing the sewing machinists’ pay, the deal struck with their employers saw the women return to work still earning 8 per cent less than their male colleagues. It took until 1984 – following another workers’ strike – before they were finally paid the same rates as the men performing the same work. In the meantime, the impact of their efforts to achieve equality in the workplace led to the codifying and enshrining in law of the Equal Pay Act, which ordered that women should not only receive the same pay as men, but also that holiday entitlements, pension rights, pay and reward schemes, bonuses, company perks, and any other benefits should be provided equally.

In 2010, the Equal Pay Act was repealed and superseded by the Equality Act, which sought to consolidate, supplement and update all previous legislation that formed the basis of anti-discrimination law. Chapter 3 of Part 5 of the Equality Act reinforced the principles of the Equal Pay Act, again mandating that employers cannot discriminate against workers on the basis of gender, and must pay men and women the same wages for carrying out the same roles.

The City Council equal pay issue

Given the long and well-documented history of the fight for equal rights in the workplace, it is almost inconceivable that Birmingham City Council – along with many other councils up and down the country – had the short-sightedness to ignore legislation and continue with their discriminatory practices. For private employers to behave in such a fashion is bad enough, but for state bodies such as city councils to treat female employees with such inequity and apathy is even harder to comprehend, given their proximity to the government and their stated commitment to uphold the laws of the land on behalf of the people they represent and serve.

Yet, an equal pay issue was rife across the United Kingdom. A raft of claims in the 90s and early 2000s were brought against a number of local authorities on behalf of female workers who were chronically underpaid compared to men who were performing jobs of equal value. Those most affected included women in jobs such as dinner ladies, who were found to have claims for tens of thousands of pounds. Many councils sensibly took steps to rectify this issue, albeit that many of the claims took years to resolve. However, some failed to do anything adequate to remedy this discrimination.

The problems in Birmingham

Birmingham City Council is the largest City Council in Europe. It therefore was acutely exposed to the equal pay issue, but also had the manpower and skills to avoid it. However, in the 2000, a significant number of equal pay claims were lodged against the Council. These claims included a case involving 4,000 female Birmingham City Council workers across 49 different jobs who argued that they were excluded from bonuses paid to those in traditionally male-dominated jobs such as refuse collectors and road workers.

The claims were opposed by Birmingham City Council, and various issues went up on appeal. In 2012, more than 170 former City Council employees, including cooks, cleaners, catering and care staff, won an equal pay compensation fight that went all the way to the UK Supreme Court. The issue in that appeal was whether the claims could be commenced in the High Court, or whether they had to be issued in the Employment Tribunal. Birmingham clearly hoped that, if it limited claims only to the jurisdiction of the Employment Tribunal – which had a shorter limitation period of six months to bring claims, versus the High Court’s six year period – then it could narrow the scope of claimants.

Birmingham lost. The Supreme Court held that claims could be issued in either jurisdiction. Birmingham’s attempts to narrow the issue through the Courts had failed.

Over the next decade the City Council paid out more than £1.1bn in equal pay compensation. However, trade unions have argued that the Council has still failed to adequately implement a job evaluation scheme that would have rooted out the source of the inequality. Crucially, the Supreme Court judgment was not enough to bring the dispute to an immediate settlement satisfactory to the parties.

Where to go from here

The situation at Birmingham reached a head this year. The City Council states that its current estimated equal pay liability is between £650m and £760m. It also notes that that liability is increasing on a monthly basis. Council correspondence with the Department for Levelling Up, Housing and Communities suggests that the final bill could be as much as £1.15bn. This ongoing liability was a central reason why the Council was forced to issue a s114 notice in September, in effect declaring itself bankrupt.

Ultimately, it took a long overdue eleventh-hour deal with trade unions to address equal pay going forward. The compromise plan was said to have been agreed after last minute negotiations between the Council and the three main unions – GMB, Unite and Unison. But a resolution to the apparent fiasco is something which could have happened years ago. Equal pay cases which should have taken less than five years to resolve instead dragged on for 20 years, and it could be another decade until they are fully concluded. Birmingham City Council is still not out of the woods, with those representing women workers insistent that strike action might be necessary until the outstanding liability is fully paid out.

In the wake of the catastrophic mishandling of pay claims in Birmingham, campaigners say that other councils are facing equal pay compensation bills running into billions of pounds. City councils including Sheffield, Coventry, Dundee, and Glasgow now facing similar disputes. It is undisputed that many city councils have been found to be systematically underpaying women. There remain thousands of women who have been victim to discriminatory pay practices by councils, and who deserve fair and equal access to justice. Central government is being urged to urgently consider how it will deal with the ballooning cost to avoid other local authorities collapsing into bankruptcy.

Further to the local authorities already facing major claims, the GMB union has announced that it is also currently gathering evidence regarding at least 20 other councils. According to GMB organiser Rhea Wolfson, there is evidence of issues wherever the union looks.

‘Birmingham has been exceptionally bad in how they have handled equal pay in the past,’ she said, ‘but other councils need to be learning the lessons and learning them urgently. There are bad practices everywhere.’

In Glasgow, for example, about 8,000 women working in home care, schools and nurseries, cleaning and catering services in the city went on strike before the council agreed to pay out £770m in compensation. They had to sell council assets, including Glasgow’s Kelvingrove Museum and Art Galleries, to fund the settlement of its liabilities.

The clear inference of the financial turmoil which has engulfed Birmingham City Council is that failing to pay fairly does not pay dividends. Reluctance to address the issue immediately will, in fact, cause the opposite outcome – a bill that many councils, which are already struggling to balance the books because of austerity, will be unable to pay.

In Birmingham, what appears to be a council-wide denial of the scale of the problem led to the reinstatement of a discriminatory pay system; the seeds were sown for a disaster which could have been alleviated at a much earlier stage. The pay differential between men and women performing equal work or work of equal value was too much of a gulf to bridge without substantive budgetary cuts needing to be sought elsewhere.

Conclusion

Every council in the country should take heed of what has happened to avoid getting in the same mess. There is no excuse for such discrimination to take place in any workplace in modern-day Britain, with employers having had decades to address any injustice and stamp out any illegal practice. Whether in the private or public sector, any discriminatory management acting with a sense of impunity should take heed of Birmingham’s sorry tale, and act fast to ensure that they change their ways so as not to suffer a similar fate.