The Pitfalls Of Reducing The Gap In Haste

Deborah Casale and Sacha Sokhi look at the lessons from a recent sex discrimination case in which two male directors successfully claimed they were dismissed to improve their employer’s gender pay gap.

Since 2017, if you are an employer who has a headcount of 250 or more, you must comply with regulations on gender pay gap reporting. Due to the effects of the pandemic, the Equality and Human Rights Commission has announced that the deadline for gender pay gap reporting has been pushed back to 5 October 2021 for the 2020/21 reporting year.

However, a recent employment tribunal case has seen an employer under fire and subjected to claims of sex discrimination for its attempts to reduce its gender pay gap. In this article, we explore what happened in the case and what steps employers can take to reduce their gender pay gap lawfully.

Facts of the case

Bayfield v Wunderman Thompson [2021] concerned an advertising agency which in 2018 published a high gender pay gap of 44.7%. At a diversity conference later that year, two of the agency’s directors gave a presentation addressing its reputation as a “Knightsbridge boys’ club’ and its desire to improve its gender pay reporting figures. The presentation was accompanied by a slide referring to ‘white, British, privileged, straight men’, with the text struck through. The speaker said the firm’s reputation as being full of these types of employees had to be ‘obliterated’.

The claimants, Chas Bayfield and Dave Jenner, both white men in their fifties, complained to HR that the presentation showed bias against heterosexual white men and that they feared for their jobs. Later that month, the two men were included in a redundancy selection pool of all the creative directors and they were subsequently dismissed on the grounds of redundancy. 

Mr Bayfield and Mr Jenner brought claims at the employment tribunal stating that their complaints amounted to a protected act under the Equality Act 2010 and to a protected disclosure under the whistleblowing legislation contained in the Employment Rights Act 1996. Furthermore, they complained that they were subjected to unlawful detriments and discrimination on grounds of their race, age, sex and sexuality, that they were harassed and victimised and that their dismissals were automatically unfair and discriminatory.

The agency’s case was that it decided to make two of its creative directors redundant in January 2018, before the complaints. However, there was no evidence to support this and the decision was, in any event, superseded by a proposal in March 2018 to make no creative directors redundant.

During the tribunal hearing, Mr Peon, executive creative director and the second respondent, accepted that he had asked for one creative director to be removed from the potential pool for redundancies. He had done this because, although she had the lowest score in the previous redundancy pool selection matrix, he wanted to save her from redundancy as she was a woman.

Tribunal decision

The employment tribunal acknowledged that the desire to improve diversity was a legitimate response to the gender pay gap report and falling revenue. Nevertheless, it found the redundancy selection process to be a sham designed to implement the predetermined decision to dismiss the claimants.

The tribunal therefore found that Mr Bayfield and Mr Jenner had been unfairly dismissed and discriminated against due to their sex. Their claims of harassment and victimisation also succeeded in part.

In the tribunal’s view, there was overwhelming evidence of direct discrimination arising from the claimant’s complaints about the conference. These complaints put them in the firing line during the subsequent redundancy process. The tribunal stated that:

Regardless of the reason, the [redundancy] proposal arose after their complaint and was sealed by 23 May…There was fury at the claimants – and this is at the forefront of their mind. There is a 2nd thought process – 2 birds – dismissing the claimants deals with the issue of reputation also.

However, the tribunal dismissed the claims of automatic unfair dismissal on the grounds of whistleblowing. It found that the claimants’ emails did not amount to protected disclosures as they were saying that in the future their right not to be discriminated against might be breached, but without any information about how this was or would be the case. The claims of race, age and sexual orientation discrimination were also dismissed.

When is positive action lawful?

While many employers will have a legitimate desire to improve their gender pay gap, this case illustrates that doing so in a way that goes beyond taking positive action may risk claims of sex discrimination.

Section 158 of the Equality Act permits an employer to take action to compensate for disadvantages that it reasonably believes are faced by people who share a particular protected characteristic.

An employer can take any action provided that it is a proportionate means of achieving the aim of:

·        enabling or encouraging people who share a protected characteristic to overcome or minimise a disadvantage that they face;

·        meeting the needs of people who share a protected characteristic; or

·        enabling or encouraging people who share a protected characteristic to participate in an activity.

Meanwhile, s159 of the Equality Act can be used in a tie-break situation in recruitment. Where two or more candidates are as qualified as one another, this provision allows an employer to recruit one candidate with a protected characteristic over the others.

Employers have to proceed carefully, especially when using s159, as can be seen from Furlong v Chief Constable of Cheshire Police [2019]. Mr Furlong won his sex discrimination claim at the employment tribunal after he was unsuccessful at an interview for a new intake of police constables. The force had relied on the tie-break provision under s159 to assess all 127 applicants to be of equal merit. It therefore went on to appoint all black and ethnic minority, female, gay and disabled applicants. Given the lack of scoring and the evidence that some had performed better than others, this blanket approach was found to be discriminatory.

If an employer is going to invoke the provisions of s158 or s159 of the Equality Act, it needs to ensure that there is a detailed paper trail with clear implementation considerations and regular review of the policy. The difference between positive action and direct discrimination is subtle and employers should take advice and proceed with caution when using these provisions.

Practical steps

How then can employers lawfully take steps to reduce their gender pay gap?

Balanced interview panels

Interviewers can be trained in reducing unconscious bias and in the principles of diverse recruitment. However, to minimise the risk of male managers recruiting in their own image, it is also important to have a mix of women and men on the interview panel.

Mentoring schemes

Mentoring that is aimed at disadvantaged groups, such as those returning to the workplace after maternity leave, will assist in developing a diverse workforce and identifying ways to tackle the gender pay gap. Reciprocal mentoring benefits not just the mentee but helps the mentor to understand the organisation’s culture towards women and scope for change.

Diversity managers

Employers could appoint a diversity manager whose role is to implement and review steps to improve the gender pay gap. If an organisation is too small to appoint a dedicated diversity manager, a diversity task force of existing employees could be created.

Networking

As with mentoring, targeted networking opportunities for female employees or those returning from maternity leave will help to break down barriers to women returning to work or progressing through the organisation. In turn, this will assist in narrowing the gender pay gap.

Pay reviews and promotions

Clear criteria for reviewing pay and making promotions that factor in periods of maternity leave would ensure that women are not pushed back a year in pay or seniority each time they take maternity leave. Benchmarking or job evaluation schemes are also beneficial to ensure men and women receive the same pay for the same or equivalent work or work of equal value and to avoid equal pay claims.

Flexible working

Commitment to flexible working, backed up by clear guidance and support, would encourage women to stay with an organisation and enable them to progress to roles which reflect their skills and seniority.

This article was first published in Employment Law Journal (October 2021) and is also available on lawjournals.co.uk