Retained EU Law and equal pay

Earlier this month, the government found itself in the unusual position of pledging to preserve EU law rights in the UK.  The Retained EU Law Act would have led to the repeal of article 157 of the Treaty on the Functioning of the EU, which enshrines the principle that men and women should receive equal pay for equal work.  But the government stepped in, issuing a statement that the effect of article 157 will be replicated in UK regulations.

A change in approach

This is not the first time that the government has stepped in to prevent core employment rights from being repealed by the Retained EU Law Act.  The Act, which was intended to sweep away EU laws, following the UK’s departure from the EU, has been dogged by controversy.  Business groups and trade unions alike alerted the government to the potential for confusion and disruption that the Act posed.  

In May, the government announced that it was reversing its position on the headline provision of the Act – the automatic repeal of all EU-derived secondary legislation.  Instead, only specified regulations, to be listed in a schedule to the Act, would be repealed.  This change in approach went some way towards reassuring business that key employment protections, including working time rules, TUPE rights and protections for part-time workers and fixed term employees would not simply disappear.  However, equal pay rights remained at risk.

What is article 157 and why does it matter?

Although the equal pay rights contained in the Equality Act 2010 were not under threat from the Retained EU Law Act, article 157 would have been revoked from the end of 2023.  Article 157 allows comparisons in equal pay claims to be made between workers in the same establishment or service, where the terms and conditions are attributable to a “single source”.  This allows UK workers to rely on comparators who are not employed by the same or an associated employer but whose contracts are determined by the same body or organisation.  The right is not written into domestic legislation.  Instead, claimants have been able to rely on the direct effect of article 157.  This is not a mere technicality, but a crucial extension of the Equality Act protection, as evidenced by the fact that the right is currently being relied upon by hundreds of female Tesco store employees in their claims for equal pay with male distribution employees.  

What effect will the Retained EU Law Act have now?

The change in position on article 157, in conjunction with the reversal of the sunset of legislation, goes a long way towards shoring up worker rights against the effects of the Retained EU Law Act.  However, the impact of the Act will still be felt by businesses from 1 January next year.  The removal of EU principles of interpretation, together with the removal of the principle of the supremacy of EU law, calls into question how key employment rights should be understood, and how they will be interpreted by courts and employment tribunals.  Workplace issues, arising in areas of employment law that have been strongly influenced or shaped by EU law, will be vulnerable to challenge and uncertain outcomes.  The established rules on key rights such as carry over of annual leave entitlement or the calculation of holiday pay, may no longer apply, leading to uncertainty for employers.

Are further policy changes on the horizon?

The government’s latest pledge on equal pay raises the possibility that future commitments may be made to protect other worker rights, which may be vulnerable to the effects of the Retained EU Law Act.  We will continue to follow the issue closely.

For further information, see Employment Law and the Retained EU Law Act 2023