Spotlight on: equal pay disputes

Equal pay has been pushed firmly back into the spotlight by the recent publication of the Women and Work Commission’s report.

Equal pay claims are already a costly business, as Dresdner Kleinwort Wasserstein discovered in January.

The investment bank faces a $1.4bn (£800m) lawsuit filed by six women for unfair and abusive treatment – the biggest ever pay claim of its kind. It includes allegations that they were passed over for senior roles and paid significantly less than their male counterparts.

As an HR professional, any allegations about unfair pay schemes will run through you, so what is the best way to handle this?

First, there is more at stake than money. “Equal pay claims can take years to be resolved through the legal process,” says a spokesman from trade union Unison.

“They take up time and valuable resources. They also damage morale as staff feel they are being unfairly treated and are being made to go through hoops just to prove their jobs are of equal value to their comparators.”

The most favourable solution for everyone is to try to avoid such disputes altogether.

Pay audits

More and more companies are choosing to conduct pay audits as a means of avoiding such disputes.

The 2006 reward management survey by the Chartered Institute of Personnel and Development (CIPD) found that more than half of employers (54%) had or were planning to carry out an equal pay review; they are carrying them out more regularly; and they are investigating other areas as well as gender, such as age and race.

“Conducting an equal pay review is the best way of ensuring your pay system is delivering equal pay. Yearly monitoring of pay and grading will help to ensure consistency and deal with problems as they arise,” says Caroline Slocock, chief executive of the Equal Opportunities Commission.

But they are not a panacea, and consequently the CIPD agrees with the Women and Work Commission’s rejection of compulsory audits.

“Legislation alone will not change culture and attitudes. It is likely to lead to a minimalist, box-ticking approach that does not tackle the underlying problem,” says Dianah Worman, CIPD diversity adviser.

Fair play

Although pay reviews play an important part in flagging up any areas of discrepancy, employers need to look beyond these figures.

The CIPD argues that to keep reward systems fair, organisations must adopt objective criteria for determining and implementing pay schemes.

“You have to ensure they underpin the value system of your organisation,” says Worman.

“If they don’t, then you’ve got a big disconnect, and that’s when you’re likely to get claims coming in.”

Top tips

  • Keep HR staff up to date on training
  • Conduct an equal pay review
  • If you identify a problem, deal with it. If you fail to take action, an employee could take you to an employment tribunal
  • Regularly monitor your pay systems and employment practices
  • Ensure transparency in your pay systems
  • Work with trade unions where present
  • Look to address causes of the pay gap other than pay discrimination

Source: Equal Opportunities Commission

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