Equal Pay – What is Happening Today?

2007 is the European Year of Equal Opportunities, “to recognise the European Union’s achievement in seeking to ban discrimination”. Is this relevant from a reward perspective? Today, pay and benefit structures have an impact beyond the UK’s early equal pay legislation that gave men and women the right to the same pay for the same or equivalent work.

In practice, achieving equitable pay and benefit structures has proved a significant challenge just on gender alone, as employers continue the shift away from legacy schemes. While media focus has been on public sector councils and authorities settling multi-million pound ‘group’ claims, the gender pay gap still prevails across industry sectors globally.

Looking at equal pay today, gender continues to be a key priority while the profile of other equality strands, such as age, is growing. This is expected to have an impact on job evaluation schemes which have traditionally valued the job holder’s ‘experience’. On a broader issue, the growing use of job evaluation is seen by some as a more objective based justification to help defend equal pay claims.

As the wider use of performance pay and market based pay rates continues, employers need to be mindful of how these policies operate in practice e.g. is there a trend for men (or women) to get higher performance related pay? Take a look at the Tips section below to see what factors you need to consider when carrying out an Equal Pay Review.

Tips: What Factors do You Need to Consider when Carrying out an Equal Pay Review?

Decide on the equality strands. Equal Pay Reviews take time and commitment, so consider including equality strands beyond gender, such as race and age. Note that the decision may be influenced by the accessibility of data.

Clarify the scope of the review. Will all employees be covered or just those based in the UK? How will long term consultants e.g. contracts over 6 months, or agency staff be treated? Be careful about excluding such people unless there is a clear reason to do so.

Identify the data requirements. Gather data about the job, the job holders and pay and benefits using the Equal Opportunities Commission (EOC) 5-step model for the recommended list of data requirements (see Website of the Month below for details).

Assess where men and women (or other equality strands) are doing ‘like work’. Again, use the EOC 5-step model which takes account of ‘like work’ – work rated as equivalent or equal work.

Use the data to determine existence of pay gaps. Carry out a range of comparisons e.g. the average base pay and total earnings of all men and women doing the same jobs to establish if pay gaps exist and their extent.

Establish cause of pay gaps to assess if they are fair. Consider a range of factors including the job evaluation system (where it exists) to assess if the pay gap causes are fair. Part of this process will include assessing how policies operate in practice and the transparency of data as these are key influencing factors.

Follow these steps when you are considering an Equal Pay Review to take account of the important factors.

We have provided this advice as guidance only. If you need specific advice relating to your business and equal pay, please call Reward First on + 44 (0) 1367 710 618.

Website of the Month

To continue the theme of Equal Pay, our website this month is the Equal Opportunities Commission website. Click here to visit their website.

What could be improved? The slow access to ‘quick facts’ such as the latest gender pay gap information can be frustrating.

What works well? The website offers a wealth of information and materials, free toolkits such as the EOC 5-Step Plan and up to date news and media. The site produces a free monthly newsletter which summarises current issues.

Just News

The UK’s Gender Equality Duty could generate a sharp increase in equal pay claims. The implementation of the UK’s Gender Equality Duty in April 2007 has generated an increase in public sector organisations carrying out Equal Pay Review to achieve compliance, as well as those that supply goods and services to the sector. The legislation requires the public sector to promote gender equality which includes equal pay. Legal experts predict a pressure on costs as a result of private sector bodies needing to publish pay details and internal equity comparators.

Belgium continues to negotiate collective agreements using age related pay systems. While anti-age legislation has been in place across Belgium for much of the 21st century, some sectors such as banking and insurance are still using age-based pay systems, in spite of this. While the country’s employment minister has granted a ‘transitional period’ for 2007, implementation of anti-age provisions are required from 2008. There remains some doubt on benefit provisions such as whether older workers are still entitled to benefit from additional holiday leave.

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