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Delivering pay equality in Scottish Local Government

The UNISON Scotland Submission to the Scottish Parliament Local Government and Communities Committee

March 2009

Executive Summary

Thousands of women working for local authorities receive unequal pay despite the fact that they perform work of equal value to their male colleagues. Many women live in poverty as a result. This is unacceptable to UNISON and it should be unacceptable to the committee.

Single status was intended to resolve the issue of equal pay but the new arrangements have been imposed on workers in over 80% of cases. Equal pay is a continuing problem and UNISON invites the committee to accept the observation that local government employers in Scotland have some distance still to travel before they deliver equal pay and, consequently, that the remaining cost implications are considerable.

UNISON highlights that many employees have been compensated on two separate occasions. However, the problem is of a scale and complexity that these compensation arrangements do not extinguish liability and those same employees may have additional multiple claims on a continuing basis.

In particular, UNISON draws the committee’s attention to the likelihood that the single status arrangements imposed on employees under protest from trade unions contain new and/or continuing liability. This is unacceptable from an equality perspective as well as being financially undesirable.

UNISON is pursuing approximately 15,000 claims in Scotland of which over 7,000 are in local government. The figure for local government fluctuates according to the trends in pre-tribunal settlement but the present trend is upward and is expected to exceed 12,000 by June 2009. The current upward trend in litigation reflects ongoing disputes over the merit of pay arrangements imposed by local authorities. UNISON Scotland has received in excess of 2,000 requests for assistance on equal pay matters in the first two months of 2009.

UNISON recognises the strength of case management by the tribunal service. UNISON also recognises that it is appropriate for public sector employers to mount a robust defence of their pay arrangements where they have a genuine belief in the merit of those schemes. However, after three years, the litigation in Scotland has yet to progress beyond preliminary, procedural and jurisdictional arguments. There has yet to be a concluded local authority case and no orders for compensation have been issued. Speaking for our members – justice delayed is justice denied.

UNISON suggests that the management and funding of equal pay settlements is an important issue that has not received adequate attention to date. Related to this is the absence of any public debate around the merit of the established English practice of capitalising equal pay liabilities. However, UNISON invites the committee to find that the most pressing priority is to ensure that continuing liabilities are identified and eradicated. The practice of issuing multiple compensation payments to the same employees reflects a failure to get to the root of the problem and this is the issue that should give greatest cause for concern from both an equal opportunities and a public spending perspective.





The Single Status Agreement1 was signed in 1999 and it is a framework agreement for local government in Scotland. The intention behind the agreement was to move the vast majority of council workers to harmonised terms and conditions alongside equality proofed pay systems based on job evaluation.

The employers missed the extended implementation date of April 2004 and the level of litigation has been rising steadily since that time. The employers presented proposals for a national matrix for equal pay compensation arrangements via CoSLA in November 2005 and these were rejected by the trade unions. Each Local Authority then made direct offers of compensation to individual employees in the period 2005 and 2006. This episode was the subject of an inquiry by the Finance Committee of the Scottish Parliament which reported in March 2006.2

It is significant to note that at the time of this first phase of compensation payments the majority of councils had not implemented job evaluation. Although compensation was paid under a compromise agreement or the ACAS conciliation procedure, under which employees renounced their equal pay rights, the effect of these agreements is time limited. In due course the agreements expired and in the continuing absence of new pay and grading arrangements the past liabilities re-emerged.

With the recurrence of equal pay liabilities in the period 2006 to 2008 the majority of Local Authorities made a second round of compensation offers direct to employees in the period 2008/09. Compensation was paid under compromise agreements or ACAS conciliation and, once again, the effect of those agreements is time limited. The question for the committee is whether there is a risk that a third or even fourth round of compensation may require to be paid.

For example. At its meeting on 12th March 2009 the City of Edinburgh Council will consider a proposal to enter a third round of equal pay compensation payments to low paid women.3

This question of recurring liabilities has never been adequately investigated and it was first highlighted in UNISON evidence to the Equal Opportunities Committee in September 2008.4 It is essential to note that introduction of a non-discriminatory pay system based on job evaluation is the only way to bring continuing liabilities to an end. UNISON recognises 26 Scottish local authorities make the public assertion that they have reached this goal and we acknowledge that significant progress has been made. However, there are major problems in many of the new pay systems and this cannot be overlooked.

Continuing Liabilities

Single status implementation has been slow. Although 26 authorities have implemented some form of job evaluation only six achieved this by collective agreement.

1 http://www.unison-scotland.org.uk/localgovt/singlestat.html

2 http://www.scottish.parliament.uk/business/committees/finance/reports-06/fir06-04-01.htm



In over 80% of cases UNISON recommended that its members reject the employers’ proposals because of concerns over continuing discrimination.

The committee will be concerned to hear that in some cases single status has actually widened the pay gap between women and men. In other cases, whilst the gap has reduced, it remains significant and of concern.

In July 2008 the Court of Appeal delivered a significant decision on the application of the Equal Pay Act to new pay systems ("Bainbridge"). Although job evaluation tends not to have a radical effect on the majority of employees there tends to be a minority group who benefit from re-grading and a corresponding group who lose. There is a common practice adopted by employers whereby the financial gains and losses resulting from a pay review are phased in over a relatively short period of time. In the specific cases before the Court of Appeal the court found that these transitional arrangements delayed the arrival of gender equality and the disadvantage of this delay accrued to women in a manner that was disproportionate and unjustifiable. The House of Lords has declined to hear an appeal.

This type of Bainbridge liability occurs after the implementation of job evaluation. However it is just one possible source of ongoing or continuing liability in new pay arrangements.

The precise implications of this decision for individual authorities in Scotland are unclear. However it is likely that this decision will give rise to additional claims as employees challenge new pay arrangements.

The 2008/2009 Budget Process

The Equal Opportunities Committee made some astute observations in their budget report (see above)

They recognised the injustice of unequal pay and the direct and indirect cost to the public sector and wider Scottish economy. They recognised the apparent failure of the wider regulatory framework to influence the course of events. In particular they noted the apparent failure of Audit Scotland to identify adequately the risks associated with these contingent liabilities.

The members of the Committee highlighted the importance of the gender equality duty in the active management of discrimination and the associated financial liabilities. The Local Government Scotland Act 2003 includes elimination of discrimination in the definition of Best Value and it is therefore of concern to UNISON that Audit Scotland, who audit the Best Value regime, have played such a peripheral role in addressing pay discrimination.

Critically, the Committee drew attention to the absence of an impact assessment within the budget process and the decision of the finance minister not to make specific additional provisions for equal pay costs. It is UNISON’s view that an equality impact assessment within the budget processes is an essential requirement.

UNISON were surprised and disappointed that both Audit Scotland and CoSLA declined to attend the round table discussion with the Equal Opportunities Committee. They have since given evidence to the committee on 24th February 2009 and this gives rise to further concerns.

Evidence of Audit Scotland

In evidence to the Equal Opportunities Committee on 24th February Audit Scotland indicated, among other things, that:

"It is not our business to take a view on policy matters or on the extent to which councils meet their statutory requirements"

"The bulk of equal pay payments were made by local authorities in 2005-06, and they have continued to address the situation by making payments. Some authorities have largely settled the matter by agreeing their single status pay structures, but they still recognise that a potential liability exists."

"Everyone has their eye on the Redcar and Cleveland Borough Council v Bainbridge case that is taking place down south, which has possible implications for Scottish local authorities. I believe that the case is now at the Court of Appeal in England. If the court finds in favour of Bainbridge, rather than the local authority, that will have implications for our councils, which have also made compromise agreements as part of their equal pay negotiations."

"This year, when we are talking to councils, we will ask them whether they have considered the potential impacts of the Bainbridge case. By the time we get to that discussion, the outcome of the case will be known. If the outcome is not in Redcar and Cleveland Borough Council’s favour, we expect councils to make some reference to that in their annual accounts. That kind of risk assessment should feature in the financial statements."

"We do not consider whether one scheme is inherently more risky than another. I could not say, for example, whether more claims are generated in a council where a system has been imposed than in one where the system has not been imposed."

"The approach is not so much one of risk assessment as one of verifying that the figures in the financial statements are correct and that legitimate payments have been made. That is the extent of our interest."

"The buck stops with the local authorities. We do not have control over what they do or how they do it. Our responsibility is to highlight the areas in our remit. Equal pay is clearly an important area because there is legislation behind it and there are implications for the accounts, so we take the appropriate audit action."5

In UNISON’s respectful submission, these contributions indicate an omission or oversight on the part of Audit Scotland. Local Authorities in Scotland have a statutory duty under the Local Government Scotland Act 2003 to deliver Best Value and assessing Best Value compliance is the statutory responsibility of Audit Scotland. Best Value is defined by section one of the 2003 Act and is summarised in Ministerial guidance as follows:

  • to make arrangements to secure continuous improvement in performance (while maintaining an appropriate balance between quality and cost); and
  • in making those arrangements and securing that balance, to have regard to economy, efficiency, effectiveness, the equal opportunities requirements and to contribute to the achievement of sustainable development;6

5 http://www.scottish.parliament.uk/s3/committees/equal/or-09/eo09-0302.htm#Col823

6 http://www.scotland.gov.uk/Publications/2004/04/19166/35250

The guidance goes on to state that an authority which secures Best Value will be able to demonstrate:

  1. • a culture which encourages both equal opportunities and the observance of the equal opportunities requirements;
  2. • measures are in place to meet the UK-wide equal opportunities requirements e.g. Equal Pay Act 1970 Sex Discrimination Act 1975 Race Relations Act 1976 as amended by the Race Relations (Amendment) Act 2000 Disability Discrimination Act 1995

and all relevant subordinate legislation made under these Acts;

  1. • adoption of the meaning of "equal opportunities" as is set out in Schedule 5 to the Scotland Act 1998, namely, "the prevention, elimination or regulation of discrimination between persons on the grounds of sex or marital status, on racial grounds or on grounds of disability, age, sexual orientation, language or social origin or of other personal attributes, including beliefs or opinions, such as religious beliefs or political beliefs";

More specifically, section 59 of the 2003 Act states "The Scottish Ministers, local authorities, the authorities, bodies, office holders and other persons mentioned in section 16(1) of this Act and any other person discharging functions under this Act shall discharge those functions in a manner which encourages equal opportunities and, in particular, the observance of the equal opportunity requirements."

Reading the Audit Scotland evidence in the context of the Best Value rules, UNISON Scotland makes the following observations.

  1. • Unlike the competitive tendering regime it replaced, the Best Value rules look beyond the balance sheet and define high quality public services with reference to a number of additional factors including equal opportunities.
  1. • Equal opportunities sit alongside economy, efficiency and effectiveness as a key factor to which local authorities must have due regard. The 2003 Act says, in terms, that an authority delivering Best Value will eliminate discrimination and promote equality.
  1. • In our submission, the fact that Best Value is defined in this way demands a corresponding change in the methodology adopted by Audit Scotland. It is no longer adequate to assess unequal pay as a contingent liability and a financial risk. Best Value is multi-dimensional. A serious, systemic breach of anti discrimination law is in-itself a failure to deliver Best Value as defined by the Scottish Parliament in 2003. There is no need for a contingent liability to crystallise in the form of equal pay compensation for it to trigger an alarm bell at Audit Scotland – Best Value requires evidence of robust anti-discriminatory practice and the active promotion of equality.

The question is whether the methodology adopted by Audit Scotland enables the commission to make this type of assessment.

With respect, it appears from the evidence of 24 February 2009 that Audit Scotland is struggling to keep track of basic financial risks far less engage with the wider definition of Best Value.

Contrary to the impression created by Audit Scotland the English case of Bainbridge v Redcar & Cleveland Borough Council is not a live case. There is no point in waiting for an outcome favourable to local authorities. The matter was concluded in 2008.

The financial implications for local authorities vary from case to case but we estimate that Bainbridge liabilities will run to several hundred million pounds. That is in addition to the previous projected cost of equal pay of £500 million. It comes as something of a shock to UNISON that Audit Scotland are unaware of the legal parameters local authorities are required to work within.

But there is a wider question about the Best Value regime and the extent to which local authorities and Audit Scotland have moved beyond balance sheet auditing and engaged with the equality targets embedded in the Best Value regime.

The Audit Scotland evidence to the Equal Opportunities Committee gives the clear impression that the Commission views its remit as stopping short of an assessment of the quality of anti-discrimination measures adopted by Local Authorities. And yet the ministerial guidance states that a local authority that delivers Best Value will be able to demonstrate measures to eliminate unlawful discrimination. In our view, no assessment of Best Value can be complete without an external and objective assessment of a council’s compliance with discrimination law including the Equal Pay Act. The duty to make that assessment rests with Audit Scotland.

Audit Scotland should therefore be asked to review their audit methodology to ensure that they are auditing for equality as well as auditing for financial risks that might arise from existing inequality. The Best Value rules require nothing less.

No Win No Fee Solicitors

One important feature of the Equal Pay landscape is the presence in Scotland of an English law firm who operate on a contingent fee basis – so-called No-Win-No-Fee. The background to this type of legal service lies in the civil legal services system in England and Wales. Damages based contingency fees, where the claimant pays their solicitor directly from their damages typically through a percentage claw back, are barred in England and Wales apart from in the Employment Tribunals. This is a result of a legal quirk as Employment Tribunal proceedings are defined as non-contentious. No such system has been adopted in Scotland where contingency fees are unlawful.

In addition to the contingency fee the Cross & Co arrangement includes a penalty clause under which people who elect not to use the services of Cross & Co are required to pay a charge of £500 for every six months the arrangement has been in place.

In 2008 UNISON was approached by Ms J Quinn, a UNISON member who was also a client of Stefan Cross and Co. Ms Quinn had received a letter from Cross and Co threatening legal action against her in the English County Court. With assistance from UNISON the matter was placed before the Court of Session in Edinburgh. The Court found that there were two aspects of the Cross and Co arrangement that were unlawful – the contingent fee and the penalty clause.

UNISON recognises that access to justice is a complex issue and that unmet legal needs are best addressed through a diverse range of legal service providers. UNISON has a long history of partnership working with law centres, advice agencies, CAB, and the equalities commissions and it is important that the work of these agencies is not curtailed. On the contrary, UNISON made a significant financial contribution to the first mass litigation campaign for equal pay in 1994 when significant funds were granted to Scottish Low Pay Unit.

However, the specific activities of Cross & Co, as illustrated by the Quinn case, raise some worrying questions.

  1. • It is not known how many times Cross & Co have relied on this unlawful contingency clause to deduct money from local authority employees.
  2. • Nor is it clear how frequently legal action has been threatened against workers in a manner similar to that experienced by Ms Quinn.
  3. • Finally, there is no central record of the number of occasions on which local authorities have paid legal fees directly to Cross and Co by reference to this unlawful arrangement

For the future, it is to be hoped that Cross & Co draw this issue to the attention of their clients, withdraw any threats of Court Action in England and amend their business practices to reflect the requirements of Scots law.

The primary issue at stake here is the protection of low paid workers as consumers of legal services. However there is a related issue which members of the committee may wish to consider. It is important that Scottish workers have the right and the freedom to make a legal complaint against their employer if they believe an unlawful act has taken place. However, it is also important for workers, and the wider public, that workers are free to reach an informed decision about pre-litigation settlement without fear that they will be subject to unlawful penalty charges for settling against the wishes of their legal adviser.

The Way Forward

There are a variety of issues the committee may wish to consider in charting an effective course towards equality in local government pay and stability in local government finance.

- Law Reform

The Local Government Committee meets at an opportune time. Discrimination law is reserved to Westminster and the UK Government are about to publish the results of their review of discrimination law in the new Equality Bill.

UNISON is calling for measures to streamline and accelerate the passage of equal pay claims. Unequal pay is a structural or systemic problem linked to longstanding societal assumptions about the value of the different work performed by women and men. It is a cruel and sadistic logic that requires each individual woman to prove she has experienced injustice when large groups of women have a shared experience of discrimination. We need representative actions to enable discrimination to be tackled efficiently and effectively.

The Gender Equality Duty will also be reformed. This ground breaking requirement on employers to adopt a proactive approach to the elimination of discrimination is at risk. As the Finance Minister found during the budget scrutiny by the Equal Opportunities Committee it can be challenging to face the simple question – "what positive steps have you taken to eliminate pay discrimination?".

Several Scottish councils have conducted equality impact assessments on their single status proposals only to find that the new arrangements actually widen the pay gap between women and men. For the Gender Duty to be effective there must be a requirement that employers use the results of these audits to actually tackle discrimination under threat of meaningful enforcement action.

UNISON’s full agenda for law reform is set out in the attached Equality Bill briefing and we invite the Committee to endorse the measures in relation to equal pay.7

- Auditing

If the Committee accepts the UNISON submission on this point then the Best Value rules place an additional duty on Audit Scotland and that is a duty to audit for equality. The Best Value rules require auditors to equip themselves with the ability to make an independent assessment of the equality measures adopted by Scottish councils.

Auditing for equality in a Best Value context therefore requires a new audit methodology, possibly based on a partnership with other relevant agencies such as the EHRC.

- Capitalisation

Since 2006, councils in England and Wales have been granted permission to borrow against or sell assets to the tune of over £1billion to help meet the costs of equal pay. On the 3rd of March 2009 the Minister for Local Government in England and Wales announced the third round of capitalisation to assist councils with the management of equal pay costs. No such facility has been made available in Scotland.

On 23rd January 2008 John Swinney, Scottish Finance Secretary, told the Scottish Women’s Budget Group that he was examining the merit of capitalisation as on option for Scottish Local Authorities.

UNISON’s position is that it is preferable to manage equal pay liabilities without recourse to capitalisation where possible but capitalisation should be made available as an option where specific criteria are met.

There are some authorities for example who have yet to implement single status and who face several hundred equal pay claims. These type of exceptional circumstances might merit consideration under a capitalisation scheme.

Conversely, there are some authorities who implemented single status some time ago but took no account of the Bainbridge principles set out in August 2008. The passage of time has denied these authorities the type of flexible response to Bainbridge afforded to late implementers and it is possible that capitalisation might assist in managing these liabilities.

The specific requirements attached to a capitalisation scheme require detailed consideration. However, the most important requirement is a copper bottomed guarantee that the liabilities subject to capitalisation will not recur. Elimination of liabilities arising from unequal pay can only be delivered by an equality proofed pay system envisaged by the Best Value Guidance and it would be prudent to insist on independent verification that equality has been achieved.

7 http://www.unison.org.uk/equality/pages_view.asp?did=8197


Conclusion & Recommendations

There is no doubt that considerable efforts have been made since the Finance Committee reported on Single Status in 2006. However, the present situation is unsatisfactory for a variety of reasons and the Committee should take the following steps:

  1. • Press the Finance Secretary to reconsider the funding required to close the pay gap.
  1. • Press the Finance Secretary to establish capitalisation as a finance option and set out criteria against which applications can be made.
  1. • Press the Chancellor and the Finance Secretary to permit local authorities to offset equal pay costs, in whole or in part, against their share of the £5 billion efficiency target.

• Set a timetable for local government to implement single status in a way that eliminates discrimination and brings the repeated rounds of equal pay compensation to an end.

  1. • Support the UNISON case for Equal Pay law reform during the passage of the forthcoming Equality Bill.
  1. • Consider measures to ensure that equal pay claimants can obtain access to justice free from the unlawful threats of court action.
  1. • Invite Audit Scotland to review its Audit Methodology in a way that gives equality auditing the weight that is required by the Best Value regime.

UNISON Scotland are grateful for the opportunity to assist the committee with its work on equal pay and we are happy to provide further assistance if required.

Glyn Hawker

Scottish Organiser - Bargaining & Equal Pay

UNISON Scotland

March 2009



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