Equal Pay Audits

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Why use Equal Pay Audits?

The requirement for employers to publish their Gender Pay Gap figures started a wider movement towards examining pay equality in the workplace. Whilst employers need to be able to explain any gender pay gap, the spotlight is moving towards equal pay and greater transparency as a whole.

Employees can make an equal pay claim on grounds outside of gender including race, disability and age. Paydata’s services help to shed light on this sensitive subject, providing transparency that works towards making a level playing field for all employees, whilst also improving staff satisfaction and trust in management.

The Equality and Human Rights Commission (EHRC) is the leading body responsible for equal pay. The commission works to:

Eliminate discrimination;
Reduce inequality;
Protect human rights; and
Build good relations

Employers have been prohibited from treating men and women differently in terms of pay and conditions since the Equal Pay Act in 1970 (mostly superseded by the Equality Act 2010). Indeed, Paydata first starting working in this area in 2003, supporting employers wishing to identify if there is a pay differential between demographics in the business and more importantly: what is causing it.

The most accurate and thorough way to determine whether your pay system discriminates in practice is to conduct an equal pay audit.

Decide the scope of the equal pay audit

Deciding the scope of the equal pay audit and identifying the information required involves some crucial decisions about the entire audit.

Determine where people are doing equal work

Under the equal pay provisions of the Equality Act 2010, men and women in the same employment who are performing equal work should receive equal pay. This makes equal work the foundation of an equal pay audit – and it’s vital that everyone involved understands this concept.

Collect and compare pay data

Once you’ve identified which employees are doing equal work, you need to compare pay information to identify any pay gaps. Before you start analysing your data, however, it’s essential it is checked thoroughly for completeness and accuracy.

Establish the causes and any justifications for significant pay gaps

Your equal pay audit might reveal significant differences between the pay (which includes contractual benefits), of men and women doing equal work. If this is the case, you need to identify which aspects of your pay system are causing the differences – and why.

Develop an equal pay action plan

If you have found differences in pay which cannot be justified, you must put a plan in place to address this as soon as possible.

Our approach to equal pay follows this best practice guidance. With years’ of experience in the field, the Paydata team is best placed to offer professional advice, ensuring that your business is seen to be leading the way in your field.

Losing key and valuable members of staff because of an issue relating to equal pay can be hugely damaging to an organisation's growth. Not only does this make for a commercial issue, but it can potentially manifest into poor PR for the business which may not only dissuade potential candidates wanting to join your team, but also potential suppliers and customers from working with you. With this in mind, equal pay audits should be conducted periodically and taken seriously.

Work of Equal Value

Where there is either no job evaluation scheme in place or multiple schemes. With multiple schemes, the first step is to establish grades that have equal demands, so jobs can be compared across schemes. Where no scheme exists, the assessment method depends on the circumstances involved. In Paydata’s experience, most customers need help organising and processing their data. We can produce equal pay reports to highlight potential problems and examine data in further detail to show areas that require attention. We can also provide pay modelling services to help you develop and implement an equal pay action plan.

Having a robust job evaluation scheme will make your equal pay audit easier and more robust. If you don’t have a scheme (or your scheme isn’t up-to-date), Paydata can conduct an audit on your behalf.

It is also worth considering investigating your equal pay issues under legal privilege. This approach means that you use your solicitor to instruct a third party (such as Paydata) to undertake work on your behalf. This can then be reported back via a solicitor, who can advise you on how to interpret the results. The benefit of this approach is that advice given under legal privilege is not admissible in a court or tribunal. Some employers conduct their own audits but if they discover things that they fail to address, it can count against them should they face an equal pay claim.

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Our equal pay audits enable organisations to measure the overall pay differences (in percentage difference and total pay bill) between groups of employees based on grounds such as gender, ethnicity and age.

Why use Equal Pay Audits?

How do equal pay audits work?

Decide the scope of the equal pay audit

Determine where people are doing equal work

Collect and compare pay data

Establish the causes and any justifications for significant pay gaps

Develop an equal pay action plan

Equal pay measures two of the three key building blocks in the workplace

Would you like to know more about Equal Pay Audits? Get in touch.

Tim Kellett

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