Stacey Macken v BNP Paribas London Branch – In Brief

Last week, the remedy judgment for the Stacey Macken v BNP Paribas London Branch (“BNPP”) claim was published by the Employment Tribunal. In 2017, Ms Macken brought claims for equal pay, direct sex discrimination, victimisation, protected disclosure detriment and harassment against her employer BNPP. In 2019, the Employment Tribunal found that BNPP had (1.) paid Ms Macken less than her male comparator on the grounds of sex, (2.) directly discriminated against Ms Macken on the grounds of sex, and (3.) victimised Ms Macken after she had raised concerns about unequal pay and sex discrimination.

The liability judgment in 2019 served as something of a red flag for the financial services sector in that not only was the conduct and sexist culture covered extensively by the press but the judgment was also particularly scathing and critical of the pay practices of the financial services sector more generally. The Tribunal particularly noted that it rejected BNPP’s “implicit suggestion that banks are somehow in a special position and that [the Employment Tribunal] should accept as a fact of life that they have opaque pay structures”.

In response to the findings of the Tribunal in 2019, BNPP sought to change their pay practices and corporate culture by instituting a remediation programme including:

1. preparing job descriptions and reviewing hierarchies across the company

2. conducting an annual equal pay review

3. reviewing recruitment and performance assessment practices and

4. conducting additional training for its employees

It can also be assumed that BNPP had hoped that, by instituting this programme, an order for an equal pay audit might be avoided. Whilst much of the press commentary on the judgment has focused on the total compensation that the Tribunal awarded Ms Macken (being in excess of £2 million) critically the Tribunal has ordered, despite BNPP’s remediation efforts, that an equal pay audit must be undertaken (and ultimately published) by June 2022.

What Must the Equal Pay Audit Cover?

The order made by the Tribunal, one of the first of its kind, is that BNPP must, by June 2022, complete an equal pay audit in respect of anyone who was employee between 1 January and 31 December 2021. This includes employees who only worked part of the year, or who were off sick during that time. In respect of these employees, the audit must contain all of their monetary compensation including:

1. base pay

2. pension contributions and

3. allowances and discretionary bonus payments

Once this data is compiled, BNPP are also under a legal obligation to:

1. identify any differences in pay between men and women

2. explain the reasons for any identified difference

3. include the reasons for any potential breach of equal pay (i.e. where women have been paid less than men for no other reason other than sex, in breach of equal pay regulations) and

4. set out the plan to avoid breaches occurring or continuing

Crucially, what this means is that in the event BNPP discover further breaches, they will be required to equalise the pay between their male and female employees, including retro-actively aligning the salaries. If they fail to do this, they effectively risk a female employee bringing a new equal pay claim against them and beginning a tribunal process all over again.

What is particularly interesting is that, despite BNPP’s arguments that they had taken steps to identify pay inequality and had already rectified discrepancies, the Tribunal did not agree that this was sufficient. Instead, the Tribunal noted that BNPP’s practice had fallen significantly below the statutory guidance on equal pay, such that it was “logical” that other women working there would have been in the same situation as Ms Macken. The Tribunal further commented that “it is notable that [BNPP] has chosen to retain an opaque pay system” suggesting again that this is a practice the Tribunal are going to continue to be both on the look-out for and increasingly critical of.

The Tribunal was particularly critical of BNPP’s equal pay review process because it did not consider bonus payments, despite the findings that the Tribunal had made in 2019, that Ms Macken experienced direct sex discrimination in respect of the setting of her bonuses. They also noted that they were provided with little to no information on the methodology applied or the approach taken to analyse and mitigate the risks of pay inequality in BNPP. As such they were left with little option, given that BNPP had clearly breached Equal Pay legislation but to order an equal pay audit in this case.

What are the Risks Associated with an Equal Pay Audit?

It goes without saying that the commercial risk of an equal pay audit mainly arises through the publication of a detailed analysis of all employee remuneration. Not only does this mean that an employer’s competitors will have access to commercially sensitive information, thereby enabling them to poach key employees with the prospect of higher salaries, but also this risks all active employees in the company being able to have an indication of what their colleagues are earning in comparison to them.

In addition, the fact that an equal pay audit has been ordered means that a Tribunal has found that an employer has broken the law and has paid women less than men on the basis of their sex alone. The negative press coverage that such a judgment creates, could also severely damage an employer’s reputation in the prospective job market, let alone significantly lowering the morale of its existing employees.

Finally, it is almost inevitable that an equal pay case, with all the negative publicity that these tend to create, would also generate an increased amount of Employment Tribunal claims.

How Can Those Risks be Mitigated?

In order to best mitigate the risks of an equal pay claim (and subsequently an order to complete an equal pay audit), employers should ensure they are considering the statutory code of practice as it relates to equal pay and that they are undertaking equal pay audits on a regular basis. In order to reduce the risk even further, employers could also consider adopting transparent pay practices with clear guidance for employees on how pay progression takes place and against which criteria pay is assessed.

For further information, or to discuss any of the points raised in this update, please contact our Employment Group on 0118 977 4045 or employment@herrington-carmichael.com.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.