Birmingham City Council has reached an agreement to settle historical equal pay claims brought by two trade unions which left the authority with liabilities estimated at £760 million.
In a statement issued on Tuesday, the local authority said a paper related to the “framework agreement” will be put before its cabinet committee next week to seek formal approval for the plan.
The full terms of the settlement reached with GMB and Unison are confidential, but the council said the cost of the settlement falls within the limit of an Exceptional Financial Support package agreed with the previous government in January.
GMB Union said the agreement meant that, four years after launching their campaign, 6,000 low-paid, predominantly women workers look set to finally receive settlement payments from the local authority.
Settlement payouts are expected to be up to four times higher than the payment offered to workers in 2021, with settlement expected to take place in the middle of 2025, the union said.
Councillor John Cotton, leader of Birmingham City Council, said: “This framework agreement marks the end of an intense period of dialogue between the council and its unions.
“It is an important step on the council’s improvement journey. I would like to put on record my thanks to GMB and Unison for the constructive way in which they have approached these negotiations.
“I was appointed as leader to end the failings within this council that led to the equal pay liability and this framework agreement is intended to mark the start of a new era of productive and progressive industrial relations built on trust and mutual respect.”
Rhea Wolfson, GMB’s head of industrials relations, described the agreement as a “historic outcome” for women employed by the council.
“This result would not have happened without their dedicated and tireless leadership of a campaign which has overcome huge odds,” she said.
“They were told there wasn’t enough money, that they must accept that women workers are paid less.
“But they showed council bosses that the show doesn’t go on without them. Their bravery on the picket line, in the classrooms, care homes, offices and workplaces across Birmingham has been staggering.
“Pay discrimination is rife and GMB will not turn a blind eye when women workers are being shortchanged.”
The Labour-run council declared itself effectively bankrupt in September last year after identifying equal pay liabilities estimated at £760 million, and was said earlier this year to be on a “narrow path to financial sustainability” dependent on budget cuts.
Mr Cotton acknowledged that the council is facing “unprecedented challenges” and said it “will only get through this period by working collaboratively with its staff and their union representatives to focus upon delivering the best possible outcome for communities across the city”.
“The next phase of the equal pay programme will be to deliver a new pay and grading model and job evaluation scheme so that pay inequality at the city council can end once and for all,” he said.
Unison West Midlands head of local government Claire Campbell said: “This is a good day for low-paid women who work at the council. They will at last get the pay justice they deserve.
“Birmingham City Council has longstanding industrial relations issues but this agreement will show what can be achieved when the council negotiates constructively and in good faith.
“This will hopefully be the much-needed turning point for staff, services and local communities across the city.”
In June 2023, the council said it had already paid out £1.1bn to settle equal pay claims over the previous decade.
As of March last year, the council estimated that equal pay liabilities still current were in the region of £650m-£760m, with “this liability continuing to accrue at an estimated rate of between £5 million and £14 million a month”.
The council approved a 9.99% rise in council tax and a budget containing plans for “unprecedented” cuts to services at a meeting nine months ago.
More than 50 Labour councillors voted through the 2024/25 budget described by the city’s Conservative group leader as “a double whammy of higher taxes and fewer services”.
The meeting was told £300 million of cuts over two years, including to library services, were needed to secure £1.255 billion in Exceptional Financial Support loans from central government.
