Midland councils face paying £1 billion to compensate the victims of discriminatory pay policies, explains Public Affairs Correspondent Paul Dale
Britain’s councils have operated discriminatory pay policies for decades, routinely favouring male employees with generous rewards.
Dustmen, road sweepers and highways staff typically qualified for lucrative weekly bonuses but school dinner ladies, cleaners and cooks did not.
Putting that right by complying with the Equal Pay Act and European employment legislation is costing local authorities, and council tax payers, so much money that no one can be quite sure about the extent of the final bill.
The estimate for Birmingham City Council, the country’s largest local authority, was put at £250 million two years ago.
Schools alone face a bill of £30 million to compensate dinner ladies.
A spokesman said last night that it would be impossible for the council to give a firm estimate.
West Midlands councils face a total bill in excess of £1 billion, according to research by the Local Government Employers organisation.
An LGE spokesman described the figure as a “totally unmanageable burden” which councils would struggle to meet.
In Birmingham, the council is taking advantage of a government fund by borrowing money to finance back-pay awards to hundreds of women employees, with some individual hand-outs for long-serving staff topping £40,000. Repaying the money over many years will, naturally, eventually have an impact on council tax bills.
A new development, however, could push up costs even further.
Most councils, including Birmingham, introduced a cut-off point for paying compensation which meant that anyone who had left the authority’s employment more than six months’ earlier would not qualify for back pay. It meant that, for instance, a school dinner lady might have retired after 30 years’ of unfair pay but would not qualify for a cash lump sum if she had left work more than six months previously.
This was based on a rule that employment tribunal claims have to be brought within six months of a claimant leaving work.
A number of no-win no-fee law firms are actively challenging this decision on behalf of former council employees. London-based solicitors Leigh Day & Co is representing about 500 women in Birmingham, Wolverhampton and Warwickshire and is to hold a series of open days to which potential claimants are invited.
If a High Court action results in a ruling that the six-month limit is unfair, the floodgates could open for thousands of women across the Midlands who would then be able to make a claim.
Clive Benson, from Leigh & Day, said: “Councils have chosen this six-month period because it’s the cut-off point for employment tribunals, but their discrimination is a fundamental breach of contract – and cases like these can be brought within six years of leaving. We think it unfair that a worker could have spent 20 years missing out on bonuses and then be denied compensation on a mere technicality such as this.”
The councils deliberately imposed the six-month rule in an effort to keep a lid on their total liabilities. Birmingham and other local authorities insist that they took legal advice before imposing the limit and they believe the decision can be defended.
But Mr Benson said: “Councils have been aware of the inequality for years and are now recognising that this difference in pay discriminates between male and female staff. We are still receiving new enquiries on a daily basis from other ex-council staff who were also refused compensation because they had left work more than six months ago.”