Options avail­able for women seek­ing equal pay

Over the course of her career, an Aus­tralian woman will earn $1 mil­lion less than a man, and will retire with less than half the sav­ings in her super­an­nu­a­tion account.”

- Sha­ran Bur­row, ACTU pres­i­dent, Octo­ber 2009

Gen­der wage gap increas­ing for Aus­tralian women

Despite the fact that women in Aus­tralia won the right to equal pay in the ear­ly 1970s, so far we haven’t suc­ceed­ed in turn­ing that right into a real­i­ty. In fact in recent years Aus­tralian women have gone back­wards rel­a­tive to oth­er countries.

In 2006 Aus­tralia was #15 in the World Eco­nom­ic Forum’s glob­al gen­der gap index. By 2009 we had slipped to #20. Aus­tralian women now face big­ger wage gaps than women in Syr­ia, Indone­sia and Thai­land who are doing sim­i­lar jobs. On aver­age, Aus­tralian women today still earn 17% less than their male counterparts.

What are the options for women who want to pur­sue an equal pay claim?

So what hap­pens when a woman decides to pur­sue an equal pay claim in this country?

The­o­ret­i­cal­ly, there are three legal options avail­able — equal remu­ner­a­tion appli­ca­tions, sex dis­crim­i­na­tion claims at both fed­er­al and state lev­el and adverse action claims.

But the big ques­tions are, when can these options actu­al­ly be used and how like­ly are they to pro­duce the desired result.

In prac­tice, it’s still very dif­fi­cult for Aus­tralian women to achieve pay equal­i­ty by pur­su­ing legal avenues.

Equal remu­ner­a­tion orders

Women have been able to apply for an equal remu­ner­a­tion order for more than a decade, most recent­ly under the Fair Work Act and before that, under the Work­place Rela­tions Act. This option has been devel­oped over time to ensure that Aus­tralia ful­fils its oblig­a­tions under var­i­ous inter­na­tion­al conventions.

Pre­vi­ous­ly this option was only avail­able where women were receiv­ing unequal pay for work of equal val­ue. How­ev­er, the Fair Work Act changed this to equal or com­pa­ra­ble val­ue”, which has made the prin­ci­ple broad­er. So women in a female dom­i­nat­ed occu­pa­tion can apply for equal remu­ner­a­tion orders if they believe that they are being paid less than men in a male dom­i­nat­ed occu­pa­tion, if the val­ue of the work is comparable.

How­ev­er, this option is gen­er­al­ly lim­it­ed to unequal pay claims of gen­er­al appli­ca­tion, rather than a par­tic­u­lar employ­ee, because Fair Work Aus­tralia (FWA) has to be sat­is­fied that no ade­quate alter­na­tive rem­e­dy is avail­able. So if a female employ­ee dis­cov­ers that she is being paid less than a male col­league in the same organ­i­sa­tion, she will gen­er­al­ly have to go for one of the oth­er two options.

Case study – Equal Remu­ner­a­tion Case

In May 2011 a deci­sion was hand­ed down in an impor­tant suc­cess­ful test case involv­ing employ­ees in the social, com­mu­ni­ty and dis­abil­i­ty indus­try. These are the 200,000 work­ers around the coun­try who look after the home­less, the dis­abled, refugees, domes­tic vio­lence vic­tims, the elder­ly and oth­er vul­ner­a­ble peo­ple. It’s an indus­try over­whelm­ing­ly dom­i­nat­ed by women, it’s been viewed his­tor­i­cal­ly as women’s work’, it’s one of the low­est paid sec­tors in the coun­try and not sur­pris­ing­ly, it has a very high rate of staff turnover. Sev­er­al trade unions launched this case about a year and a half ago. There was con­sid­er­able debate between the trade unions and the state gov­ern­ments about the cor­rect way to proceed.

The Full Bench (of Fair Work Aus­tralia) ruled that FWA has a dis­cre­tionary pow­er to make an equal remu­ner­a­tion order when it is sat­is­fied that there is pay inequal­i­ty for work of equal or com­pa­ra­ble value.

In exer­cis­ing this dis­cre­tion, FWA is guid­ed by the objects of the Fair Work Act, which include to pro­vide a bal­anced frame­work for coop­er­a­tive and pro­duc­tive work­place rela­tions that pro­motes nation­al eco­nom­ic pros­per­i­ty and social inclu­sion for all Aus­tralians”. FWA is also guid­ed by equi­ty, good con­science, the mer­its of the mat­ter and the need to respect and val­ue diver­si­ty by help­ing to pre­vent and elim­i­nate discrimination.

This case is impor­tant because there have been almost no oth­er cas­es of this type in the past. There was one brought by the Aus­tralian Met­al Work­ers Union in 1998, seek­ing increas­es for female employ­ees in a fac­to­ry in Syd­ney on sim­i­lar grounds, but this claim was reject­ed by the Aus­tralian Indus­tri­al Rela­tions Com­mis­sion because the union failed to prove that the work being done by the female-dom­i­nat­ed clas­si­fi­ca­tions was of equal val­ue to the work being done by the male-dom­i­nat­ed classifications.

How FWA can estab­lish that women’s pay is unequal

There are two ways that Fair Work Aus­tralia can find that women’s pay is unequal. The first is by iden­ti­fy­ing a valid male com­para­tor group that is paid more than a female dom­i­nat­ed group per­form­ing work of equal or com­pa­ra­ble val­ue. The sec­ond way, which was used in the Equal Remu­ner­a­tion Case, is to estab­lish that the pay is sub­ject to gen­der-based undervaluation.

How­ev­er, this is not that sim­ple. The Full Bench found that the indi­cia approach used by the Indus­tri­al Rela­tions Com­mis­sion of NSW is use­ful in deter­min­ing whether pay is sub­ject to gen­der-based under­val­u­a­tion. This approach examines:

  • Whether the work is female dom­i­nat­ed and has a female characterisation
  • Whether there is a strong union pres­ence in the indus­try in which the work is per­formed (because a stronger union pres­ence usu­al­ly indi­cates a bet­ter pro­tect­ed workforce)
  • Whether there is a large com­po­nent of casu­al workers
  • Whether there is a lack of or inad­e­quate recog­ni­tion of qualifications
  • Whether there are lim­it­ed train­ing or career paths
How FWA deter­mines the order

The next step is for Fair Work Aus­tralia to quan­ti­fy the extent to which this work has been under­val­ued and come up with a solu­tion which redress­es the balance.

It has to be said that despite the suc­cess of the case to date, the bat­tle for equal pay is far from over for women in this sec­tor. Fair Work Aus­tralia has invit­ed fur­ther sub­mis­sions on the case. Pay increas­es are being opposed by AI Group, the NSW gov­ern­ment and the Vic­to­ri­an gov­ern­ment, among others.

So even though every­one agrees that this is one of the low­est paid sec­tors in the coun­try, that the work has his­tor­i­cal­ly been under­val­ued because it’s per­formed by women, that this leads to hard­ship for these work­ers and their fam­i­lies and that the high staff turnover com­pro­mis­es ser­vice deliv­ery, many of these ser­vices are fund­ed by gov­ern­ments which dread the pre­dict­ed blow-out in costs. Any solu­tion is prob­a­bly anoth­er year down the track and is unlike­ly to lead to gen­er­ous pay increas­es for women in this sector.

Nev­er­the­less, it is one of the first suc­cess­ful deci­sions for women seek­ing equal pay and so it has the poten­tial to show the way for­ward for oth­er women in sim­i­lar circumstances.

Sex dis­crim­i­na­tion claims

The sec­ond legal option for women who want to pur­sue equal pay is a sex dis­crim­i­na­tion claim. This can be made under both fed­er­al and state employ­ment leg­is­la­tion which pro­hibits employ­ers from direct­ly dis­crim­i­nat­ing on the basis of gender.

These statutes also pro­hib­it employ­ers from engag­ing in indi­rect dis­crim­i­na­tion on the basis of gen­der. This occurs where an employ­er requires an employ­ee to com­ply with a require­ment which a sub­stan­tial­ly high­er pro­por­tion of women are unable to com­ply with and which is not rea­son­able in the circumstances.

Sex dis­crim­i­na­tion case study: NSW v Amery

In 2006, thir­teen NSW teach­ers argued that the Depart­ment of Edu­ca­tion and Train­ing had indi­rect­ly dis­crim­i­nat­ed against them in for­mu­lat­ing the rates of pay applic­a­ble to per­ma­nent and casu­al teach­ers. Per­ma­nent teach­ers were paid accord­ing to a 13-point scale, but casu­al teach­ers were paid on a five-point scale, with the high­est rate of pay for a casu­al teacher being at the eighth lev­el of a per­ma­nent teacher. As casu­al teach­ers could not progress beyond this pay point, they would receive less pay than per­ma­nent teach­ers, even if they had equiv­a­lent teach­ing experience.

The crux of the indi­rect dis­crim­i­na­tion claim was that female employ­ees were pre­clud­ed from access­ing the high­er pay rates of per­ma­nent posi­tions because in order to become per­ma­nent, they had to be able to move around the state when required. The teach­ers argued that a high pro­por­tion of women could not com­ply with this require­ment because they tend­ed to have fam­i­ly respon­si­bil­i­ties. They fur­ther argued that this require­ment was not rea­son­able because the work per­formed by casu­al teach­ers was no less valu­able than the work per­formed by per­ma­nent teachers.

High Court find­ing in NSW v Amery

In the High Court, the major­i­ty rul­ing was that there was no require­ment in the first place and so the claim was reject­ed. The rea­son­ing was that the leg­is­la­tion is restrict­ed to apply­ing to a par­tic­u­lar employ­ment cat­e­go­ry, so it was not pos­si­ble to make a com­par­i­son between per­ma­nent teach­ers and casu­al teachers.

Chief Jus­tice Glee­son found that hav­ing per­ma­nent sta­tus was a require­ment for access­ing the high­er pay scales. How­ev­er, he found that this require­ment was rea­son­able because the abil­i­ty of a teacher to trans­fer around the state is valu­able and this jus­ti­fies high­er pay.

The effect of the High Court deci­sion is to make it hard­er for women who want to pur­sue an equal pay claim, because employ­ers can avoid sex dis­crim­i­na­tion claims through the way that they clas­si­fy the employ­ment. In this case, by clas­si­fy­ing the teach­ers as casu­als and giv­ing them dif­fer­ent rights and oblig­a­tions to per­ma­nent teach­ers, the employ­er suc­cess­ful­ly dodged the sex dis­crim­i­na­tion claim.

Aus­tralian employ­ers have been doing this for years. After the 1972 equal pay deci­sion, one sur­vey of employ­ers found that 60% of them had sim­ply reclas­si­fied the work done by women to a low­er scale rel­a­tive to men, so they could avoid the con­se­quences of the rul­ing and con­tin­ue to under­pay the women.

Adverse action claims

The third avenue avail­able for women is an adverse action claim under the Fair Work Act. This claim is avail­able where an employ­er takes adverse action against the employ­ee because of the employee’s gen­der. So, if a woman dis­cov­ers that she is being paid less than a male col­league who does sim­i­lar work, she can argue that the employ­er has tak­en adverse action by dis­crim­i­nat­ing against her because of her gender.

The obvi­ous dif­fi­cul­ty here is, how does a woman find out that she is being paid less than a male col­league? Putting that ques­tion aside, if she does find out, she has the ben­e­fit of the reverse onus of proof set out in the Fair Work Act. This means that if an appli­cant can estab­lish adverse action, it is up to the employ­er to prove that it hasn’t tak­en the adverse action for that rea­son or with that intent.

There haven’t yet been any cas­es of women pur­su­ing equal pay as an adverse action claim under the Fair Work Act, so it’s not pos­si­ble to pre­dict how suc­cess­ful this option would be in practice.

How do we com­pare to the USA?

The Amer­i­can sit­u­a­tion is sim­i­lar to ours. There are at least two options for women who want to pur­sue an equal pay claim.

One is avail­able under the Equal Pay Act 1963, which pro­hibits employ­ers from pay­ing women less than men in jobs that require equal skill, effort, respon­si­bil­i­ty and are per­formed under sim­i­lar work­ing con­di­tions. This is sim­i­lar to an equal remu­ner­a­tion appli­ca­tion but it’s not as broad as the Aus­tralian option, because it can only be used where the work is of equal val­ue, rather than equal or com­pa­ra­ble” val­ue. Anoth­er lim­i­ta­tion is that employ­ers can claim an excep­tion by argu­ing that the dif­fer­ent pay rates are jus­ti­fied by senior­i­ty, mer­it or productivity.

A sec­ond option is avail­able under the Civ­il Rights Act 1964, which pro­hibits employ­ers from dis­crim­i­nat­ing against any indi­vid­ual in their pay on the basis of their gen­der. This option is sim­i­lar to sex dis­crim­i­na­tion claims in Aus­tralia, but there are not as many bar­ri­ers to mak­ing a claim in the USA as there are here.

Equal pay claim options for female professionals

Of the three legal options avail­able in Aus­tralia for women seek­ing equal pay – equal remu­ner­a­tion orders, sex dis­crim­i­na­tion claims and adverse action claims, a female pro­fes­sion­al in Aus­tralia would prob­a­bly be look­ing at the sec­ond or third of these, a sex dis­crim­i­na­tion claim or an adverse action claim, or both.

It wouldn’t be impos­si­ble to pur­sue an equal remu­ner­a­tion order, but it would be high­ly unusu­al, because Fair Work Aus­tralia would have to be sat­is­fied that no ade­quate alter­na­tive rem­e­dy is available.

How do Aus­tralian employ­ers view equal pay claims?

Beyond the ques­tion of what legal options are avail­able in the­o­ry, there is the equal­ly impor­tant ques­tion of how employ­ers in Aus­tralia view such actions in practice.

While I was writ­ing this arti­cle, I asked our employ­ment lawyers about this because they have large and small employ­er clients in many dif­fer­ent indus­tries in dif­fer­ent states and regions, so they’re very tuned in to employ­er attitudes.

I’d like to be able to say that the stig­ma attached to equal pay claims has waned and Aus­tralian employ­ers now con­sid­er it to be per­fect­ly accept­able and appro­pri­ate for women to pur­sue legal avenues in the quest for equal pay. Unfor­tu­nate­ly I couldn’t find an employ­ment lawyer who agreed with this view.

Legal action against employ­ers viewed with deep suspicion

One view I heard was that over­whelm­ing­ly, employ­ers would have seri­ous mis­giv­ings about employ­ing any job appli­cant, male or female, who had ever tak­en any type of legal action against a for­mer employer.

They wouldn’t be first on the short list. If you did decide to employ them, you’d make sure that their employ­ment con­tract was word­ed very care­ful­ly to safe­guard against any imag­in­able type of future claim.

Dis­crim­i­na­tion claims not based on equal pay

Anoth­er view I heard was that it would be high­ly unusu­al for an indi­vid­ual woman to launch an equal pay claim – it’s just not some­thing that hap­pens, because equal pay claims are typ­i­cal­ly pur­sued by unions on behalf of their members.

When indi­vid­ual women pur­sue claims of dis­crim­i­na­tion, it’s to do with how they’re treat­ed, being denied oppor­tu­ni­ties which are avail­able to men, being passed over for pro­mo­tion, or being put on the slow track after return­ing to work from mater­ni­ty leave. It’s not around equal pay.

Gen­der diver­si­ty and the Aus­tralian Stock Exchange

So as Aus­tralian women con­tin­ue to fall fur­ther behind in the gen­der wage gap, what does the future hold?

One bright spot on the hori­zon is the impor­tance placed on gen­der diver­si­ty in the Aus­tralian Stock Exchange’s cor­po­rate gov­er­nance prin­ci­ples, which came into effect in Jan­u­ary 2011. Com­pa­nies list­ed on the stock exchange are now required to set gen­der diver­si­ty tar­gets at board and senior exec­u­tive lev­el and to report every year on their progress towards achiev­ing those targets.

The Aus­tralian Human Rights Com­mis­sion has rec­om­mend­ed that if there is a lack of sub­stan­tial progress with­in five years, the gov­ern­ment should con­sid­er intro­duc­ing manda­to­ry gen­der quo­tas for cor­po­rate boards, at least for pub­licly list­ed companies.

It’s pos­si­ble that female exec­u­tive tal­ent will come to be in sig­nif­i­cant­ly high­er demand and short­er sup­ply as a result of these reforms. Per­haps this will be the cat­a­lyst that helps us to nar­row and final­ly close the gen­der pay gap in this coun­try, at least at the exec­u­tive level.

How­ev­er, it may be draw­ing a long bow to say that this will then have a flow-on effect to the wages of women at all lev­els. There may be grounds for cau­tious opti­mism, but clear­ly, there are no quick fix­es in an area where gen­der inequal­i­ty has been entrenched for centuries.

Women’s employ­ment his­tor­i­cal­ly seen as a threat to men’s jobs

To put our cur­rent sit­u­a­tion in con­text, I’d like to take you back a few decades to the 1930s. Many women had entered the work­force dur­ing the First World War and had cho­sen not to return to a full-time home­mak­er role when the war was over.

When unem­ploy­ment rose dur­ing the Depres­sion, women who worked were blamed for unem­ploy­ment amongst men. Aus­tralian footage from the 1930s proclaims:

What a crazy soci­ety it is today, with near­ly a hun­dred thou­sand men out of work and near­ly two hun­dred thou­sand women at work in fac­to­ries. Those women are doing two enor­mous­ly harm­ful things. They are dis­plac­ing men in whose sphere they have intrud­ed and they are not pro­duc­ing in the field where they were cre­at­ed to pro­duce. That is, they are not mak­ing homes and bear­ing the chil­dren our nation so des­per­ate­ly needs.”

See the web­site of Screen Aus­tralia, Equal pay para­dox.

If we go back anoth­er 50 years from that time, we get an even sharp­er appre­ci­a­tion of the his­tor­i­cal back­ground to the cur­rent sit­u­a­tion. When the first trade unions were formed in this coun­try in the 1800s, they did not allow mem­ber­ship by women or by Chi­nese work­ers. Both groups were shunned as cheap sources of labour and no one was inter­est­ed in pro­tect­ing their rights. To join a union, you didn’t just have to be a man – you had to be a white man.

So while it is galling that the gen­der pay gap still exists, real­is­ti­cal­ly we have to acknowl­edge that the dis­tance we’ve come in the last 130 years is much fur­ther than the dis­tance we still have to trav­el to achieve true equal­i­ty. Let’s just hope it doesn’t take us anoth­er 130 years to get there. 

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