Employee Questions Significant Pay Discrepancy with Colleague

A financial publication reader has raised concerns about a significant pay gap with a colleague hired two years ago, who earns £20,000 more for a similar role. The employee's manager attributed the disparity to the cost of hiring the new colleague from a rival company, citing their age and longer career as justifications.

HR expert Kate Underwood clarified that an equal pay claim is not applicable in this scenario as both employees are women. However, she stated that if age is the basis for the pay difference, it could constitute discrimination, requiring the employer to provide objective justification. Paying a premium to attract talent from competitors can be lawful, but using age alone is not a valid market-rate defense, especially when the newer colleague has less tenure.

Underwood advised the employee to file a formal written grievance, quoting the manager's statements directly. She recommended requesting the pay range criteria for the role and inquiring about the specific value the additional £20,000 is intended to secure. The expert also emphasized that any employee is within their rights to discuss pay with colleagues to identify potential discrimination, and cautioned about the time limits for bringing such claims, which typically must be initiated within three months minus one day of the discriminatory act.

Glenn Hayes, a partner at Hill Dickson, added that employers can legally justify pay differences by citing factors beyond age, such as enhanced skills or experience. He noted that even without an immediate legal claim, employees often pursue pay disparities through formal grievances, pay review requests, or by citing general unfairness. Hayes warned that a substantial gap of £20,000, if not addressed by the employer, could potentially lead to a constructive dismissal claim if the employee resigns due to a fundamental breach of contract by the employer's inaction.