Equal pay in practice checklist 1
- Make sure you understand what the equalities legislation says about terms and conditions of employment. While the equal pay provisions of the Equality Act 2010 are aimed at the gender pay gap, it’s also possible for employees to claim equality in terms and conditions of employment, including pay, on grounds of race, disability, age, sexual orientation or religion or belief – so while you’re checking that there are no gender pay gaps, it would be as well to look at the other possibilities too. And remember that pensions are treated as pay.
- Make sure your pay system is transparent. Transparency means that everyone (managers, employees, and trade unions) should understand your pay and benefit systems. In particular, employees should be able to understand how each element of their pay packet contributes to their total earnings in any pay period. Transparency is a legal requirement.
- Have one pay system for all your employees. Having a different system for staff above a certain grade, or having one system for production workers and another for administrators is not only more costly to administer, it reduces transparency and invites cross-boundary claims.
- Keep your pay system simple. The simpler the structure of your pay system, the easier it will be to understand and administer and the more likely it is to be both transparent and objective.
- Base your pay structure on an objective evaluation of job demands. This is the best way to eliminate unlawful pay gaps. Use analytical job evaluation to assess job demands and structure your pay system around this evaluation. Re-evaluate regularly.
- Equality impact assess any proposed changes to your pay system. This means that you should analyse the expected outcomes of the change to determine whether it is going to have a disparate impact on one gender, ethnic group, those with disabilities or in different age groups. If your organisation is a public body then an equality impact assessment of your policies and practices is a legal requirement. If your organisation is in the private sector, an equality impact assessment provides a risk assessment for the proposed changes.
- Limit local managerial discretion over all elements of the pay package. The more discretion you allow to line managers, the greater is the risk of anomalies which may turn out to be indirectly discriminatory. You should also monitor the impact of managerial decisions, especially where these affect performance related elements of the pay package.
- Check salaries on entry to the organisation, and on entry to grades. If men are starting on higher salaries than women, or white employees higher than Afro-Caribbean employees, then you may be importing pay discrimination into your pay system and it can be hard to get rid of it later on. Your responsibility is to provide equal pay, not to match previous salaries.
- Check rates of progression within and through the grades. If men are progressing faster than women, white employees faster than Asian employees, or disabled employees are not progressing beyond the top of the lower grades, you may well have unjustifiable pay gaps.
- Carry out regular checks to ensure that the various elements of your pay package still reward what they are intended to reward. Bonuses should fluctuate with performance; if they do not, then they are not rewarding performance and are unlikely to be justifiable. Performance payments should relate to objective criteria and be subject to regular monitoring. Market supplements should only be paid if you can demonstrate difficulties in retention and recruitment.
About the Equal pay in practice checklists.
Whilst every effort has been made to ensure that the advice given in this note is accurate, only the courts or tribunals can give authoritative interpretations of the law.
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