Good equal pay practice
On this page employers will find a summary of links to the main sources guidance on good equal pay practice and, should you need it, getting help. You can find links to more detailed sources of advice by going to the page on Tools.
If you’re new to good equal pay practice or you’re a small business, turn to the Quick-start Guide produced by the Equality and Human Rights Commission. This helps small and medium sized businesses check their pay systems for sex bias, but it also provides a useful starting point for anyone unfamiliar with good equal pay practice.
Acas also provides an introduction to equal pay.
Finding the causes of gender pay gaps in your sector
Understanding the wider context within which your pay system operates makes it easier to close the gender pay gap or to put right any unjustifiable differences in the pay of men and women doing equal work. It can be helpful to know something generally about why men’s average earnings tend to be higher than those of women, and how this manifests within particular industrial sectors.
Sectoral information is essential, but may be hard to come by. The gender pay gap is wider, for example, in the private than in the public sector, and much wider in the financial services sector than in the healthcare sector. The extent of occupational segregation also varies markedly from one sector another. Have a look for material produced by and for your own sector – this will be far more relevant than the national statistics, and will enable you to begin bench marking your organisation with others similar to you.
Building up the business case for taking action
The Equality and Human Rights Commission has a page on the Business Benefits of Equal Pay. You may also find it useful to read the report of the Women and Equalities Comittee inquiry into the gender pay gap – this sets out the wider economic case for gender pay equality. At paragraph 48 for example, Neil Carberry from the Confederation of British Industry is quoted as saying: “From a labour market point of view, the fact that we have a gender pay gap is, by definition, a sign of an inefficiency, and therefore resolving it is commercially important to our members.”
You can find the chapter on productivity from the Women and Equality Committee Report here.
However, bear in mind that the business case is sector and workplace specific. Organisations operating in sectors with large gender pay gaps, for example, or workplaces with a high degree of job segregation do not only have a larger pay gap, they are also at higher risk of equal pay claims being brought against them. Organisations wishing to make the best use of women’s skills and expertise will already be on top of the business case.
Knowing what the law says
As an employer you are responsible for ensuring that your employees receive equal pay for equal work and so you will need to know what the law says.
- The Code of Practice on Equal Pay
The Equality Act 2010 replaced the previous anti-discrimination laws with a single Act. It simplified the law, removing inconsistencies and making it easier for people to understand and comply with it. The majority of the Act came into force on 1 October 2010. The Act replaced previous legislation on equal pay, including the Equal Pay Act 1970, the Sex Discrimination Act 1975, and the equality provisions in the Pensions Act 1995, and gives women (and men) a right to equal pay for equal work.
- Additional obligations on public sector bodies
Section 149 of the Equality Act 2010 provides for the general public sector equality duty. This requires public authorities to have due regard to the need to:
- eliminate discrimination, harassment and victimisation;
- advance equality of opportunity between people who share a protected characteristic and those who do not; and
- foster good relations between people who share a protected characteristic and those who do not.
The duty covers all the protected characteristics including sex, and therefore covers equal pay between women and men.
To find out more about the obligations on public sector bodies, go to Government.
Advice on equal pay in practice
Men and women in the same employment who are performing equal work should receive equal pay. Equal work means ‘Like work’ – work which is the same or broadly similar; work that has been rated as equivalent under an analytical job evaluation scheme; or work of equal value, that is, work that is different but which is of equal value in terms of the demands of the job. ‘Demands’ mean the skills, knowledge, mental and physical effort and responsibilities that the job requires.
The most reliable way of assessing whether jobs are of equal value is to use an analytical job evaluation scheme specifically designed and introduced to take account of equal value considerations and of the types of jobs being done by your workforce. Ideally the scheme should cover all employees.
If you do not use analytical job evaluation you need to find an alternative means of checking whether protected groups are doing work of equal value. It is important to recognise that these alternative estimates of equal value are not as reliable as analytical job evaluation, and that your organisation may therefore still be vulnerable to equal pay claims.
Acas urges businesses to avoid expensive tribunal claims by introducing fair and equitable pay systems, and has produced a guide to help make businesses less vulnerable to equal pay claims through the use of job evaluation. You can find the guide here.
For advice on implementing job evaluation in the context of equal pay, read the Equality and Human Rights Commission guidance note on Job Evaluation.
Carrying out an equal pay audit
An equal pay audit provides a framework within which an organisation can assess its vulnerability to equal pay claims and take action to deal with any potentially unlawful differences in the earnings of women and men doing equal work. An audit helps an organisation to decide:
- Whether male and female workers are doing equal work;
- If they are doing equal work, whether they are receiving the same pay and contractual benefits, and if men and women doing equal work are not receiving equal pay, why not;
- Whether the reasons for any differences in the pay of women and men doing equal work (i.e. for them not receiving the same pay and benefits) are legitimate;
- On an action plan to remove any potentially unlawful differences in pay
It’s important to note that the starting point is whether women and men are doing equal work – if a woman is not doing equal work to a male colleague then she will have no grounds for claiming equal pay. And while an organisation might start by looking at differences in average earnings, an audit considers differences in actual earnings – a headline figure of an 8% gap in average earnings could mask much wider gaps in different parts of the business.
An equal pay audit can also be used to look for pay gaps by gender, ethnicity, disability or working pattern.
The authoritative guidance on carrying out an Equal Pay Audit is published by the Equality and Human Rights Commission.
- Incidence of equal pay audits
Only a minority of private sector employers have carried out an equal pay audit despite more than a decade of campaigns designed to persuade firms to take this step voluntarily, a 2013 XpertHR survey showed.
The survey – based on responses from 129 organisations employing almost half a million people – revealed that fewer than one in three (32 per cent) private-sector employers had carried out, or were in the process of carrying out, an equal pay audit or review, compared with more than three quarters (77 per cent) of public-sector organisations. The figure for the private sector was up on the 24% recorded in a 2008 XpertHR survey on equal pay audits, however. Overall the findings showed that:
- more than four employers in 10 (41 per cent) (both public and private) had carried out, or were in the process of carrying out, an equal pay audit and the majority of these had done this more than once;
- more than one in three (35 per cent) organisations said that they had plans to carry out a review in the future or had carried out some checks for equal pay; and
- one in four (24 per cent) employers had no plans to do an equal pay review and had not carried out any checks for gender pay gaps at their organisation.
When those employers that had not undertaken an equal pay review were asked what change, if any, would lead to their organisation carrying one out, the most common responses were “equal pay claims against my organisation” (40 per cent) and “none, my organisation would be unlikely to carry out an equal pay review under any circumstances” (30 per cent). Despite this, more than four out of five (82 per cent) of all employers agreed with the statement that: “Carrying out an equal pay review is a worthwhile exercise”.
The main reasons cited for carrying out an equal pay audit were to be a good employer (77 per cent), to avoid potential tribunal cases (57 per cent) and to improve transparency (49 per cent).
For those employers that did not plan to carry out an equal pay audit, the main reasons were that unequal pay was not perceived to be a problem (64 per cent) and that the issue was not a priority for senior management (57 per cent) or HR (40 per cent) at their organisation.
On the issue of transparency around pay, findings showed that:
- Most employers that have done an equal pay audit are unwilling to publish what they find. Of the 53 employers carrying out a review, more than four in 10 (43 per cent) said that no information was shared even with the employees whose pay and conditions came within the scope of the review. Just three organisations published the results of their equal pay audit externally.
- Just under half (47 per cent) of employers agreed with the statement that: “My organisation is happy for employees to discuss their pay, terms and conditions with each other” but half (50 per cent) disagreed and 3 per cent were not sure.
The survey asked employers about a wide range of HR and pay practices related to the gender pay gap. Findings include:
- A large majority of employers (93 per cent) have an equal opportunities policy and more than four in 10 (43 per cent) employers have an equal pay policy;
- almost three-quarters (73 per cent) of employers carry out workforce equality monitoring;
- just over six in ten (63 per cent) said that there is part-time working in senior management roles in their organisation;
- a similar proportion (61 per cent) report that their organisation offers maternity pay that is more generous than the statutory minimum; and
- more than half (53 per cent) say that their organisation has policies to encourage women to return from maternity leave.
The following organisations have made public what they are doing to directly address the gender pay gap:
Ernst and Young carry out regular equal pay audits
Ordnance Survey carry out regular equal pay audits
As part of its equality framework and in compliance with its public sector equality duty, the Law Society collects data on employees and job applicants. This includes data by gender and grade.
Action short of an equal pay audit
While carrying out an equal pay audit is the most effective means of ensuring that a pay system does not inadvertently discriminate on grounds of sex, actions short of a full audit can also help to eliminate sex bias. The Equality and Human Rights Commission has a page on pay systems which sets out actions short of a full equal pay audit. These include:
- Make sure your pay system is transparent
- Have one simple pay system for all employees
- Use job evaluation to objectively assess the demands of different jobs
- Carry out an equality impact assessment of any proposed changes to your pay system
- Check salaries on entry to the organisation and on entry to grades
- Check grading structures in your pay system
- Check rates of progression within and through the grades
- Ensure equality in competence pay
- Deal with any problems in performance related pay
- Consider the effect of market forces
- Make sure there is equality in bonus payments
- Eliminate gender bias from working time payments
- Limit local managerial discretion over all elements of the pay package
- Document your decisions
- Review and monitor to maintain equal pay
- Equality impact assessments and equal pay
While equality impact assessments are widely used in the public sector they are also applicable to the private and third sectors.
An equality impact assessment is an analysis of a proposed change to an organisational policy to determine whether it has a disparate impact on one gender, ethnic group, those with disabilities or those working part-time. An equality impact assessment in relation to pay is a statistical analysis of an organisation’s proposals to change one or more aspects of its grading and pay structures, with potential impact on one or more groups of its employees. The outcome of the analysis will give you confidence in your pay decisions.
Acas have a network of specialist equality and diversity advisers around the country. They will look at your current policies and practices with you, recommend improvements, help put them in place and provide training if you need it. The first visit is free of charge and usually takes no more than an hour. After that, it’s up to you to decide if you need further help. You can find out more about these services by contacting your local Acas office.
Small businesses and organisations with straightforward pay structures are unlikely to need outside help with carrying out an equal pay review – it should take no more than half a day to check out a 20-person business with five different jobs, less if there is easy access to payroll and personnel records. However, if moving to equal pay looks as though it might raise employee relations issues then Acas will be able to help. Acas can visit your organisation to help you understand what needs to be done to address a range of issues related to pay and reward and then work with you to develop practical solutions.
If you are a member, then both The CIPD and Business in the Community‘s Opportunity Now campaign provide guidance on good equal pay practice. Reducing the gender pay gap is one of Opportunity Now’s three campaign aims. The BITC link takes you to Best Practice Recommendations for Equal Pay from exemplar work with its members; these are a useful starting point for any organisation wanting to proactively address their gender pay gap. The CIPD has a useful Factsheet on equal pay. XPertHR has a comprehensive range of advice on good equal pay practice.
Chambers of Commerce provide training for their members and the wider business community, and if asked would be able to set up courses on equal pay. In Scotland the Close the Gap campaign may be able to help.
The client training arms of law firms also provide seminars on equal pay. These are generally aimed at existing practitioners and will be less suitable for organisations new to good equal pay practice.
Last updated 2nd October 2016