Equal pay audits

Kate Palmer - HR Advice and Consultancy Director

November 21 2016

An equal pay audit can help employers to determine if male and female staff are being paid equally Our guide to conducting an equal pay audit Did you know that it’s an employer’s legal duty to provide men and women with equal pay for equal work? At the start of a business venture this is usually relatively easy to implement, but as businesses grow and pay decisions are delegated, the potential for pay grades to become unlawful arises. As an employer, you can avoid this by regularly reviewing your processes for awarding wages and carrying out an equal pay audit.  Equal pay audits are used to:

  • Compare pay within the organisation
  • Identify any differences in pay for equal work
  • Examine the causes of the difference
  • Commit to putting right any unjustified differences

What will the audit entail? The first step in carrying out an audit is to decide how wide the scope of the review will be. Employers can choose to audit everyone in the organisation simultaneously, or take a structured approach by auditing one department at a time. They’ll also need to consider the degree of detail required in the information collated. For example:

  • Pay
  • Gender
  • Role
  • Pay band
  • Working hours
  • Length of service

What is equal work? The difficult part of carrying out an audit is usually determining whether men and women are engaged in equal work. The law covers three different types of equal work:

  • Like work – where work involves similar tasks or skills and has differences which are not of practical importance
  • Work rated as equivalent – where a job evaluation scheme has graded work as equal
  • Work of equal value – where work is neither of the above but has equal effort, skill, decision-making and responsibility

Employers who are having difficulty with this can choose to have a job evaluation carried out to determine the equivalence of work in their business. What happens once equal work is established? Once equal work has been recognised, the pay information needs to be collected and compared. This is usually done by calculating the average pay, and then determining the difference between the average pay received by men and women undertaking the equal work. If this calculation shows that there are differences in pay between genders, it’s important that the cause for the difference is established. If a genuine material reason for the pay difference can be justified and explained, and it’s unrelated to gender, it’ll be allowed to stand. However, if it’s determined that the disparity is gender-related, the employer will be required to put a plan in place to rectify the situation, such as:

  • Increase pay to those who are disadvantaged
  • Review policies and procedures for awarding pay increases
  • Introduce an equal pay policy

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