12/11/2012 16:26 GMT

Birmingham Council Faces Multi-Million Bill Over Equal Pay Claims

The country's largest local authority may face a bill of £757 million to settle a string of equal pay claims, including a recent ruling in favour of more than 150 women workers.

Birmingham City Council said the figure of £757m reflected combined "actual and potential" equal pay settlements between 2006 and 2012 and could rise further still if more claims are made.

An annual audit letter assessing the council's financial performance said the city had settled a proportion of its equal pay liability, but had outstanding liabilities estimated at £541m.

In a statement issued after the audit letter was made public, the local authority said: "The council shares the auditor's concern about the increase in equal pay claims against the council, which impact on its financial resilience and the resources available to deliver services.

"The affordability of this presents a major challenge."

The statement comes two weeks after a group of around 170 women workers, including cooks, cleaners and care staff, won an equal pay case against the council which lawyers said would have "serious ramifications" for employers.


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In its ruling, the Supreme Court effectively extended the time workers have to bring equal pay compensation claims from six months to six years.

Birmingham City Council had tried to block the claims, arguing they should be taken to employment tribunals, which have a six-month time limit.

But former employees persuaded judges they could bring claims in civil courts, where there is a six-year limit.

In its annual letter to Birmingham City Council, auditor Grant Thornton said the city was managing its finances well, overspending by just £2.4m during 2011/12 in the context of a £3.5 billion revenue budget.

But the auditor expressed concern that an increase in equal pay claims against the council had continued to "negatively impact on its financial resilience" and its wider delivery of value for money.

The audit letter stated: "Although the council continues to take action to manage its liability, as at 31 March 2012 the cumulative equal pay liability was £757m.

"This is an increase of £250m on the previous year. We also note that the council recently lost a Supreme Court case which may lead to further equal pay claims."

Chris Benson, of Leigh Day & Co solicitors, who is representing the women in their equal pay fight, said: "These ex-council workers, taxpayers themselves, are clearly concerned about the size of the equal pay problem and the bill Birmingham City Council face.

"However, the council are in this position because they unlawfully underpaid their staff and chose to spend money fighting this case.

"Birmingham Council should now do the decent thing and pay these women the money they are owed.

"The council for many years saved money by underpaying staff, and it is clear now the focus should be on early settlement rather than continued litigation they cannot win."