Our audits enable organisations to measure the overall pay differences (in percentage difference and total paybill) between groups of employees based on grounds such as gender, ethnicity, age. This is also broken down by like work, rated as equivalent and equal value, as well as by region and business unit. In addition, organisations will be able to determine what is driving up the pay differences, for example high performance.
Why use Equal Pay Audits?
The requirement for employers to publish their Gender Pay Gap figures signals 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 quickly moving towards equal pay.
However, employees can also make an equal pay claim on other grounds such as race, disability and age.
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from treating men and women differently in terms of pay and conditions since the Equal Pay Act in 1970 (mostly superseded by the Equality Act 2010).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 in their pay practices 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.
How do equal pay audits work?
The EHRC has set out five steps in an equal pay audit process:
Decide the scope of the 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
Our own approach to equal pay follows this best practice guidance.
Equal pay measures two of the three key building blocks in the workplace
Where people are doing the same or broadly similar jobs (for example, in finance teams “like work” might include all accounting and auditing jobs at a given level).
Work rated as equivalent
Where a job evaluation scheme operates and all those jobs graded the same are compared together.
Work of equal value
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. We can also use the job evaluation scheme that underpins our salary surveys; whilst not a defence in law, it does provide a basis to spot any suspected potential equal pay issues.
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.
Would you like to know more about Equal Pay Audits? Get in touch.
Pay and Reward Expert
Tim is a passionate HR specialist with over 20 years’ experience in pay and reward. As a director of Paydata, Tim has worked with thousands of satis...