Birmingham City Council has reached a deal to settle historical equal pay claims which left it facing a £760m bill and pushed it into effective bankruptcy.
The agreement, reached between the local authority and unions GMB and Unison, means around 6,000 mostly female staff will receive a payout.
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The full terms of the settlement will be kept confidential and the council’s cabinet will be asked to formally approve it next week, on 17 December.
Rhea Wolfson, GMB’s head of industrial relations, described the deal 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.
Unison West Midlands head of local government Claire Campbell added: “This will hopefully be the much-needed turning point for staff, services and local communities across the city.”
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The dispute relates to council workers in female-dominated roles, such as cleaners and catering staff, historically being paid less than those in male-dominated roles, like waste collection.
The authority started paying out the claims after a landmark Supreme Court case in 2012, but said last year that the bill had spiralled to about £760m.
This was one of the key factors in the council, the largest in Europe, declaring itself effectively bankrupt in September 2023 with a Section 114 notice.
The notice confirmed that all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately, while £300m of cuts and tax rises were later approved in order to secure exceptional financial support (EFS) loans from the previous government.
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In a statement on Tuesday, the council said the cost of the settlement falls within the limit of the EFS package agreed with the Tories in January.
However it is not clear if the deal will reduce the level of cuts needed to close the shortfall in the council’s finances, or the level of assets being sold off.
As well as the equal pay claims, the council’s financial problems were also blamed on a bungled IT system implementation, huge increases in adult social care demand and the impact of inflation.
Leader of Birmingham City Council John Cotton acknowledged the city is facing “unprecedented challenges”.
“This framework agreement marks the end of an intense period of dialogue between the council and its unions,” he said.
“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.”
