Sex, lies and Data Protection Act leave SMEs in peril

Firms trying to protect themselves against claims for sex discrimination by completing equal pay questionnaires submitted by employees risk falling foul of the Data Protection Act, legal experts have warned.

UK commercial law practice Reynolds Porter Chamberlain (RPC) said the danger - which is most acute for small companies - centres on the fact that employees who suspect that they may have a claim under the Equal Pay Act 1970 are now allowed to submit a questionnaire to their employer requesting information on the pay of a comparable colleague, either by name or by job title.

However, any such information on the pay of co-workers constitutes confidential personal data; under the Data Protection Act this should only be disclosed to a third party in accordance with strict guidelines, RPC says.

Geraldine Elliott, head of employment at RPC, said: "There is no legal obligation on the employer to respond fully, or at all, to an equal pay questionnaire. For companies with equal and fair pay policies who have nothing to hide, not disclosing the pay information could pose two problems.

"If they don't disclose, it will be harder to prevent a case going unnecessarily to an employment tribunal in the first place. Then, once a claim is made, the tribunal can draw its own inferences from a company's failure to provide adequate answers to the questionnaire."

According to RPC, obtaining the written permission of an employee is one way an firm can disclose information concerning an individual's pay. However, because remuneration is often a contentious issue, and the information could subsequently be disclosed in tribunal proceedings, consent is likely to be withheld.

RPC advises that companies may be able to avoid breaching the Act by maintaining the anonymity of a comparable employee, for example, by providing general information such as details of how the pay scheme operates or how job grading systems work, rather than data on a specific individual.

However, Elliott warned: "In smaller businesses, where there are fewer comparable colleagues, anonymity is likely to be much more difficult to ensure.

"If the employer is unable to disclose confidential information because they can't get consent, they should say so when responding to the questionnaire or an employment tribunal is far more likely to come to a negative conclusion." ®