The long-awaited Equality Bill (the Bill) has finally been published. The Bill is designed to harmonise discrimination law and to strengthen the law to support progress on equality. To achieve the latter of these two objectives, the Bill contains some significant new requirements that may impact on pension schemes and employers.
Key equality concepts
The Bill covers discrimination based on an individual’s sex, age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, and sexual orientation. The Bill retains the existing concepts of direct and indirect discrimination. However, despite objections, it applies the concept of indirect discrimination to disability cases for the first time. The Bill also prohibits direct discrimination or harassment that arises from an individual’s association with someone who has a protected characteristic.
What does this mean for pension schemes?
In relation to occupational pension schemes the Bill provides that:
- A non-discrimination rule (which prohibits discrimination, victimisation or harassment of scheme members by trustees and employers) will be implied into all occupational pension schemes. A non-discrimination rule covering age, disability, religion or belief, and sexual orientation is already implied into such schemes, but the Bill will extend this so that it also covers discrimination on grounds of gender reassignment, marriage and civil partnerships, and sex.
- Every occupational pension scheme will have a sex equality rule read into it. This replicates the current Pensions Act 1995 requirement. The exceptions to this rule, including the use of different actuarial factors for men and women, will continue to apply.
- Every occupational pension scheme will have a maternity equality rule read into it. The basic principle is that a woman on maternity leave should be treated in the same way as when she is not on maternity leave in relation to scheme membership, accrual of benefits and determination of benefits.
- A new public sector equality duty is imposed on public authorities and any other person who exercises public functions. This duty requires such persons to eliminate prohibited conduct, including breaches of the non-discrimination rules in occupational pension schemes and equality clauses or rules that are read into contracts of employment and occupational pension schemes.
What about employers?
The Bill contains measures to combat discrimination in all spheres. Proposals that will be of particular interest to employers include:
- The introduction of measures that will enable employers to take ‘positive action’ to accelerate anti-discriminatory actions. For example, the Bill would allow employers to base recruitment and promotion decisions on an individual’s sex, ethnic origin etc, when faced with candidates who are equally qualified, to counter perceived disadvantage or under-representation in the workforce. However, employers taking positive action could risk discrimination claims from unsuccessful candidates. It is also unclear to what extent EU law permits such positive action.
- The Secretary of State will be given the power to require private sector employers with at least 250 employees to publish information about differences in pay between their male and female employees. The government has said that it will monitor whether companies disclose this information voluntarily over the next four years and that it will only make publication compulsory if it concludes that insufficient progress has been made. The Bill will also outlaw contract terms that seek to prevent individuals from discussing the amount of their salary with colleagues.
- The Bill will strengthen the powers of employment tribunals by enabling them to make recommendations in discrimination cases that benefit the whole workforce and not just the individual who brought the claim. This is designed to prevent similar types of discrimination occurring in the future.
- Service providers will, for the first time, be prohibited from discriminating against customers, clients and other service users on grounds of age. There will be some exemptions to this that will allow what the government calls ‘beneficial’ and ‘justifiable’ age differentiation. The government will consult on these exemptions in the summer.
- The Bill will extend the test for establishing whether an individual is suffering from a ‘disability’.
What happens next?
The Bill has started its journey through Parliament, but it is not expected to become law until spring 2010. Some of the Bill’s clauses might not survive the Parliamentary process, others could be altered and new provisions could be introduced. So watch this space.
By Ruth Bamforth, associate practice lawyer, Eversheds LLP. E-mail: ruthbamforth@eversheds.com.