Birmingham City Council has reached an agreement to settle approximately 6,000 equal pay claims filed by both current and former workers over the past four years. The settlement, reached in collaboration with Unison and the GMB Union, marks a significant step in addressing longstanding pay disparities within the council.

While the exact details of the settlement remain confidential, the payouts could be up to four times higher than the workers were offered in 2021. These claims stem from a 2012 Supreme Court ruling that upheld equal pay rights for 174 council employees. Since then, the council has paid out £1.1 billion to resolve similar disputes.

Union leaders have praised the agreement as a “historic outcome” for women, bringing “pay justice within touching distance”. The issue at the heart of the dispute involves disparities between employees in female-dominated roles, such as teaching assistants, and those in male-dominated roles, such as waste collectors.

Councillor John Cotton, leader of Birmingham City Council, emphasised that the council’s next steps include implementing a new pay and grading model. There is optimism that the forthcoming job evaluation scheme will permanently address pay inequalities within the council.

Equal pay issues have significantly strained the council’s finances. Last year, the authority declared itself effectively bankrupt, estimating it would cost £760 million to settle outstanding claims. The council has already faced £300 million in cuts over two years to manage its financial challenges. The recent settlement may provide some relief by reducing the need to sell off assets to balance the council’s finances. However, it is unlikely to lessen the scale of budget cuts required, as overspending in other areas continues to pose challenges.

The council’s cabinet is expected to formally approve the agreement on 17 December 2024, marking a pivotal moment in its efforts to achieve financial and pay equity stability for this group of workers. 

This case serves as a reminder that failure to act on equal pay issues can lead to costly legal disputes and long-term financial repercussions, reinforcing the importance of continuous evaluation and transparency.  We are increasingly seeing employers routinely challenged in this legal area by both male and female workers. The absence of strong and robust pay grading, audits and job evaluation studies can leave an employer exposed to risk that could otherwise have been avoided.  This is where the value of legal advice comes in to ensure those claims do not arise and are mitigated at the earliest stages.