Spotlight on: equal pay

Equal pay claims are on the rise. In one of its final acts before being subsumed into the Equality and Human Rights Commission, the Equal Opportunities Commission (EOC) made front-page headlines when the organisation published a damning report warning that women are “generations away” from pay equality.

The report’s findings highlight the need for a fundamental shift in attitudes towards pay and gender in the workplace. In the financial year 2006-07, the Employment Tribunals Service reported that just over 44,000 equal pay claims were lodged – a 155% increase on the previous year. And figures recently released by the Chartered Management Institute, based on a survey of more than 42,000 staff, found that the average salary for female managers in the year to January 2007 stood at £45,108, compared with the male equivalent of £55,402 – a £10,294 gap.

“Given the heavy cost and time burden in defending equal pay claims, employers need to limit their exposure by acting to remove any inequalities,” urges Lucy Biddulph, solicitor at law firm Winckworth Sherwood.

Peter Christie, head of reward at global management consultancy Hay Group, also believes concerted efforts are required to address continuing gender pay inequalities.

“Despite 35 years of equal pay legislation, reward equality has been a painfully slow process, as organisations have viewed the issue primarily in terms of a low-scale legal risk,” he says. “Yet if pay equality is to be achieved, employers must take an altogether different view, taking into account their social and corporate responsibilities.”

He argues that employers must face up to their responsibility to pay staff on equal terms for performing roles of equal value. Failing to do so is indefensible from a corporate social responsibility perspective, and employers will systematically fail to get the best from their top talent if they continually demotivate half of the workforce by underpaying them.

To avoid equal pay claims, Biddulph advises employers to carry out a thorough equal pay review that covers all roles within the organisation, making sure all elements of remuneration packages are assessed in the review (for example, fringe benefits such as childcare allowances) look at any significant pay gaps and decide whether these are free from discrimination and train managers in how to avoid sex bias.

Without improved efforts to ensure the gap is closed, employers may still be bemoaning gender pay disparities in 2042.

Top tips for equal pay

  • Ensure your pay system is transparent to avoid uncertainty and perceptions of unfairness. Staff who understand their remuneration packages may be less likely to challenge them.
  • Impose narrow pay bands wherever possible, and clearly define progression between the bands.
  • Be clear about what staff actually do, rather than what their job descriptions say they do. Keep job descriptions up to date.
  • Consider alternatives to pay protection arrangements (such as a one-off lump sum payment). The longer the period of pay protection, the harder it will be to justify.
  • When deciding starting salaries for new employees, do not rely too much on their previous salary, otherwise you may be perpetuating a previous employer’s inequality.

Source: Lucy Biddulph, solicitor, Winckworth Sherwood

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