With the government delaying new rules on pay transparency until 2018, female employees will have to wait another two years to find out if they are paid less than their male counterparts. Although under the Equal Pay Act it is illegal to pay different amounts to men and women doing the same jobs, estimates from the Office for National Statistics suggest a woman on average earns around 80p for every £1 earned by a man.
While many have expressed disappointment that the disclosure of gender pay is to be delayed, there is no reason for organisations not to audit their pay practices now, addressing any inequality immediately.
Says Parveen Bunglawala, Associate Commercial Solicitor at FDR Law, “While the new regulation will now come into play in the first half of 2018, we would recommend organisations take this time to review their reward management practices and how this will support the equal pay agenda.”
Six ways to prepare your company ahead of equal gender pay transparency:
- Know the facts - The equal pay provisions of the Equality Act 2010 refer to the right of all employees to receive the same level of pay as someone performing work of equal value. The Equality Act 2010 defines equal work as: “like work”; “work rated as equivalent”; and “work of equal value”. ‘Pay’ refers to any and every part of an employee’s package, terms of employment and benefits, such as bonuses and pension contributions. (Note: this Act only applies to employers with 250+ employees).
- Consider carrying out a job evaluation scheme - Don’t assume that because roles are different, they cannot be deemed as ‘like work’. ‘Like work’ does not need to be identical work. In general, employers should ensure that no term of the contract is less favourable to one sex than the other.
- Gather information on current pay practices and rates - The Equality and Human Rights Commission suggest that employers use this time to gather information about their pay and grading arrangements, job evaluation scheme, payroll and HR systems and occupational segregation. This highlights the need for up-to-date, good quality and readily accessible data. Do your IT systems and administrative processes need to be upgraded in order to improve capabilities?
- Determine the causes of pay gaps - If any pay gaps appear be sure to determine if gender is a contributing reason. Check salaries on entry to the organisation; your responsibility is to provide equal pay, not to match previous salaries. Ensure you are not importing pay discrimination into your pay system which can be hard to get rid of later on.
- Develop an equal pay action plan - Put together an action plan to address any pay gaps. You may want to consider moving underpaid employees to the relevant point in the pay scale; expanding part-time/flexible working opportunities, improving parental leave pay and dealing with any gender stereotypes in the recruitment for specific roles
- Keep your pay system simple and transparent - Transparency is a legal requirement and means that all employees should understand your pay and benefit systems. Keep it simple and have one pay system for all your employees; having a different system for senior staff is not only more costly, but can reduce transparency, create silos and cause anomalies which may turn out to be discriminatory.
Says Parveen Bunglawala, “Not only can taking proactive steps to get up to speed now mean that any pay gaps can be addressed in advance of the new legislation, preventing a costly, and public, claim, but showing that you are compliant with the law will also help you to attract and retain the best talent by showing you are a fair and equitable employer.”
The league table ranking large firms by gender pay gap, which the Government hopes will draw attention to the worst offenders, will be published from 2018.
If you’re a business needing further advice on the new legislation, please contact us on 01925 230000.