Senior Associate Nathaniel Barber outlines the equal pay claims surrounding Birmingham City Council and their implications for city councils across the country.
Nathaniel’s article was published in HR Magazine, 29 November 2023, and can be found here.
The fundamentally simple idea of paying women and men equally for doing equal work should be hard-wired into every employer: not just private companies, but also public bodies. There is absolutely nothing new about a principle which goes to the very core of equality in the workplace.
Yet, the well-publicised crisis at Birmingham City Council demonstrates that pay discrimination is still rife. 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.
These problems were first brought to the public’s attention in the 2000s. A significant number of equal pay claims were brought against the council, including one involving 4,000 female Birmingham City Council workers across 49 different jobs who argued they were excluded from bonuses paid to those in traditionally male-dominated jobs such as refuse collectors and road workers. Since then, cases have continued to be brought, and the issues for Birmingham have mounted.
Sadly, Birmingham City Council’s response has not been what one would expect from a public body. Rather than looking to resolve the issue of equal pay – and pay its employees what is due to them – Birmingham has looked to the Courts to try and avoid its responsibilities. In 2012, more than 170 former City Council employees, including cooks, cleaners, catering and care staff, had to go all the way to the UK Supreme Court, as Birmingham continued to appeal adverse decisions against it. The Supreme Court rejected the City Council’s attempts to reduce the number of former employees that could claim for equal pay.
Over the next decade the city council paid out more than £1.1bn in equal pay compensation, but the City Council has failed to adequately address the issue. This year, the City Council stated that its current estimated equal pay liability due to be paid out in ongoing monthly instalments is between £650m and £760m, although council correspondence with the Department for Levelling Up, Housing and Communities suggested it could be as much as an additional £1.15bn. This looming bill 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 City Council and the three main unions – GMB, Unite and Unison. However, there remains the issue of those individuals who worked for the council and have been a victim of the council’s discriminatory pay practices.
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.
Sheffield, Coventry, Dundee, and Glasgow are facing similar disputes, with the GMB union gathering evidence against a further 20 authorities. In Glasgow, 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.
Central government is being urged to urgently consider how it will deal with the ballooning cost to avoid other local authorities collapsing into bankruptcy.
The clear inference of the financial turmoil which has engulfed Birmingham City Council is that every council in the country should take heed of what has happened to avoid getting in the same mess. A warning alarm has been sounded to all councils: failure to act promptly on fair pay can result in a bill that many bodies already struggling to balance the books because of austerity will be unable to pay.