Ms C S, Essex

During the King’s Speech on 17 July, laying out the Government’s priorities for the coming year, the King announced that “Legislation on race equality” would be published in draft “to enshrine the full right to equal pay in law”.

This relates to the proposed Draft Equality (Race and Disability) Bill, which aims to take a significant step towards true workplace equality for all in the United Kingdom.

Now and then: existing and proposed measures

Currently, there is a duty on employers not to discriminate against employees and workers under the Equality Act 2010 on the basis of both their race and disability, however it can be difficult for employees to bring claims in relation to equal pay on this basis.

The briefing notes for the King’s Speech set out the reasoning behind the need for this legislation.

• “Most ethnic minority groups earn less than the White British group. Between 2012 and 2022, for example, Black, African, Caribbean or Black British employees consistently earned less than their White counterparts.
• Although there has been growth in employment rates for disabled people in recent years, disabled people have, on average, lower incomes than non-disabled people. According to the Office for National Statistics, there was a gap of 13.8 per cent in 2021 and 14.1 per cent in 2019 between median pay for disabled employees and non-disabled employees.
• Building on the success of the gender pay gap reporting, mandatory ethnicity and disability pay reporting for large employers will expose pay disparity, encouraging employers to take action and coupled with additional equal pay protections allow those who are being underpaid, with greater legal certainty to make a claim.”

Currently in addition to the obligations on employers not to discriminate against employees based on the protected characteristics.

Defining equality

“Equal work” is split up into “like work”, “work rated as equivalent” under a job evaluation scheme (JES), and “work of equal value”. There is a special procedure for deciding whether two jobs are of equal value, which can make bringing a claim for unequal treatment difficult.

Equal pay law operates by way of “equality clauses”, which are treated as incorporated into every contract of employment. There are three types of equality clauses in the Equality Act 2010:

• Sex equality clause – This gives the woman the benefit of more favourable terms enjoyed by a man (or vice versa) in the same employment doing equal work, unless the difference is due to a non-discriminatory “material factor”.
• Maternity equality clause – This gives the woman the benefit of a pay rise, or a pro rata entitlement to a bonus, that would otherwise have been denied to her during maternity leave.
• Pensions equality clause – On 1 January 2024, pension equality provisions were inserted into the Equality Act 2010.

This does not extend to ethnic minorities and those living with a disability.

It appears that the proposed new Equality (Race and Disability) Bill will explicitly address this.

Concerns from employees

We understand that employees may have questions and concerns relating to challenging unequal pay.

The Acas “Asking Equal Pay Questions Guidance” advises that an employee who believes that they have not received equal pay should prepare a statement to send to their employer explaining what has happened and why they believe that they have been discriminated against by not getting equal pay.

To prepare the statement the employee should:

• Identify the comparators who are receiving better terms and conditions than they are
• Explain why the comparators are doing equal work to theirs
• Ask questions about contractual pay and benefits, such as how much the comparators doing the same or similar work earn, the comparators’ contractual terms and conditions, the reason for any differences in pay and terms and conditions if there are any, such as how pay is determined and any differences in the comparators’ job descriptions
• The employee may wish to also ask wider questions, such as how the employer decides pay rates, for statistics on the percentage of the workforce who are male or female and for copies of relevant policies, such as on recruitment or equality and diversity.

The employee should then send the statement and list of questions to their employer in an email or letter (or ask their trade union representative to send it on their behalf, if they have one).

If the employer has a policy on discrimination, bullying and harassment, the employee should check the policy to see if it says who they need to send their statement to. However, it could be sent to their manager, supervisor, or human resources.

The employee should confirm where they would like the employer to reply, for example, to their email address. A deadline should be given for the employer to reply, taking into account the time limit for the employee to submit their claim to the employment tribunal. This may well be extended to include the pay gap suffered by those with a disability and ethnic minorities.

The impact of reporting

The Gender Pay Gap Regulations came into force on 6 April 2017, and the current proposal appears to follow a similar format but in relation to ethnicity and disability rather than gender.

Mandatory ethnicity and disability pay reporting will apply to large employers with more than 250 employees. It is believed that this reporting brings pay gaps to the forefront of the minds of employers and enables employers to consider why these gaps exist and how best to tackle them.

Some employers have already been voluntarily publishing their ethnicity and disability pay gap reporting but many have not. Employers who have already taken steps to publish and address this may well be better placed to attract the best candidates to the role.

Full details of the proposals have yet to be set out, however it will be important for employers to get ready for the proposed reporting, including looking at systems to put in place to enable this reporting (if they do not already have these). Employers will need to consider the pay gaps within their workforce and steps that can be put in place to address these.

According to The Office for National Statistics (ONS), over the last decade, the gender pay gap has fallen by approximately a quarter among full-time employees, and in April 2023 it stood at 7.7 per cent.

It is not clear how much this can be attributed to the gender pay gap reporting. Disability and ethnicity pay gap reporting may help to reduce the pay gap but it is unlikely to resolve the problem completely.

For advice on a pay gap based on your sex, disability or race, please contact us for assistance.

If you choose to access financing for your business through a commercial loan, it’s important to understand who needs to agree to and authorise the debt before you proceed.

Commercial loans are a common way of investing in and growing a business, but it means taking on debt, so key directors and stakeholders who will be affected by the debt should agree to the loan.

Does this mean that every director needs to agree on a loan agreement and sign on the dotted line? This depends on a company’s internal rules as set out in its articles of association and relevant shareholder agreements.

Authorisation

Generally, all directors of the borrower (the company) will need to authorise the borrower’s entry into the loan, as well as any security offered.

This should ideally be done in an official capacity and be evidenced by board minutes.

This may also be required by:

• Lender’s criteria – To ensure responsible borrowing and prevent financial mismanagement, some lenders require that all directors are aware of and in agreement with the loan, particularly for larger loans.
• Professional advice – In some circumstances, a solicitor or accountant may advise you to involve all directors in all parts of the process, such as when not doing so could contravene legislation or there are concerns on the part of one director.

Putting names to paper

Authorisation is only the first step towards taking out a loan and is the point at which a unanimous decision should be made regarding the next steps.

However, in terms of transactional documents, contracts and loan agreements can be signed by one director in the presence of a witness or by two directors.

This is designed to relieve the administrative burden of taking out a commercial loan, as long as all directors have verbally agreed to the loan, and this is recorded in minutes or associated documents.

However, larger loans may require all directors to be signatories to ensure that all parties are aware and happy to proceed.

Ultimately, the business itself is the borrower, rather than individual directors. While directors will not be personally liable for the loan, the long-term success of the business and associated income for directors and employees could be affected if the loan leads to further debts or insolvency.

We can provide impartial, straightforward advice to any business owner or director considering taking out a commercial loan.

Contact Dashna Morarji-Sagoo by emailing DashnaMorarji-Sagoo@palmerslaw.co.uk or calling 01375 484443 or BJ Chong by emailing BJChong@palmerslaw.co.uk

The contents of this article are intended for informational and educational purposes only.

Flexible working has been hugely popular among employees for a number of years now, spurred on by the pandemic and subsequent adaptation to remote working.

As a result, amends to the Flexible Working Regulations 2014 brought in the day-one right to request flexible working from April 2024 – giving all employees the right to request flexible working arrangements from the first day of their employment as stated in their contract.

However, discussions around this right have resulted in confusion over what rights employees have and how flexible working may be defined.

We’ll explore these points of complexity and break down what you need to know about flexible working rights.

What is flexible working?

Many people think of flexible working as exclusively working remotely or on a hybrid basis.

While this is a major element of flexible working for some people, it’s not always possible or the right arrangement for a particular employee.

Under the law, flexible working encompasses much more than remote working, including:

• Job sharing
• Working part-time or reduced hours
• ‘Flexi-time’, working core hours but choosing when to start and end work
• Annualised hours
• Compressed hours
• Phased retirement

The idea behind flexible working is that the employer makes an effort to allow the employee to fulfil their duties while balancing, for example, family life or personal commitments.

It is designed to recognise that different workers have different needs, needs which need to be accommodated as far as possible to optimise productivity and employee satisfaction.

The right to request

The most important thing to remember about this right is that it is a right to ‘request’, not an automatic right to flexible working.

Your employer must deal with your request in a ‘reasonable manner’, meaning they must:

• Give your request due consideration
• Balance the advantages and disadvantages without bias
• Not allow prejudice or discrimination to influence their decision
• Consider and discuss possible alternatives
• Offer an appeal process

Your employer must respond to your request with a decision within two months (if you have not agreed to a longer response period with them), and any changes must be reflected in your employment contract.

They are within their rights to refuse your request if they have a ‘good business reason’ for doing so, for example, if your duties cannot be fulfilled remotely or in fewer hours.

You have the right to appeal a decision with your employer. It is important to obtain legal advice prior to appealing your decision as you are only permitted to make two requests in any 12-month period and cannot make a new request whilst a previous request remains ongoing.

You may also turn to a Tribunal if you feel that your employer did not act reasonably and according to legislation – but not purely on the basis that your request was refused.

For further advice on flexible working rights and for assistance with appealing a decision, please contact our Employment Law team today to discuss your needs.