Employersstill have time to respond to the EOC’s draft code of practice on equal pay,which will be taken into account by tribunals in assessing claims. Here is itsguidance on conducting an equal pay review Tackling the gender pay gap reduces the risk of litigation. It can alsoincrease efficiency by attracting the best employees, reducing turnover,increasing commitment, and cutting absenteeism. Pay is one of the key factorsaffecting motivation and relationships at work. It is therefore important todevelop pay arrangements that are right for the organisation and that rewardemployees fairly. Providing equal pay for equal work is central to the concept of rewardingpeople fairly for what they do. While employers are not required by law tocarry out an equal pay review, the Equal Opportunities Commission coderecommends them as the most appropriate method of ensuring a pay system deliversequal pay free from sex bias. Essential features of equal pay reviews Employers are responsible for providing equal pay and for ensuring paysystems are transparent. Pay arrangements are frequently complicated and thefeatures that can give rise to sex discrimination are not always obvious. Astructured pay system is more likely to provide equal pay and is easier tocheck than a system that relies primarily on managerial discretion. Acasprovides basic advice on the various different types of pay systems and on jobevaluation (www.acas.org.uk). Whatever kind of review process is used, theessential features are the same, which are to: – Compare the pay of men and women doing equal work – Explain any equal pay gaps – Close those gaps that cannot satisfactorily be explained on grounds otherthan sex These features are the same whatever the size of the organisation. An equal pay review is not simply a data collection exercise. It entails acommitment to put right any sex-based pay inequalities and this means thereview must have the involvement and support of managers with the authority todeliver the necessary changes. The validity of the review and success ofsubsequent action taken will be enhanced if the pay system is accepted both bythe managers who operate the system and by the employees. Employers shouldtherefore aim to secure the involvement of employees and, where appropriate,their representatives, when carrying out an equal pay review. Carrying out a voluntary equal pay review The EOC recommends a five-step model: – Step 1: Decide the scope of the review and identify the data required – Step 2: Determine where men and women are doing equal work – Step 3: Collect pay data to identify equal pay gaps – Step 4: Establish causes of any significant pay gaps and assess thereasons for these – Step 5: Develop an equal pay action plan or review and monitor thesituation Step 1: In scoping the review employers need to decide: – Which employees are going to be included. It is advisable to include allemployees deemed to be in the same employment – What information will be needed. Employers will need to collect andcompare broad types of information about all the various elements of pay andpersonal characteristics of each employee – that is whether male or female,what relevant qualifications they have to the job; what hours they work andwhen and where they work these; their length of service; and so on. Theinformation will vary depending on the type of organisation, its pay policiesand practices and scope of the review – Who should be involved in carrying out the review? An equal pay reviewrequires different types of input from people with different perspectives. Theywill need a knowledge and understanding of the pay and grading arrangements;any job evaluation schemes; and payroll and HR systems. It can also be helpfulto have someone with an understanding of equality issues, such as men and womenbeing segregated into different types of work – When to involve the workforce. Employers need to consider when to involvethe trade unions or other employee representatives – Whether expert advice is needed. Employers may also wish to considerwhether to bring in outside expertise. Acas can provide practical, independentand impartial advice on the employee relations aspects of equal pay reviews – As a matter of good practice, employers may also want to look at pay byethnicity and disability, or age, as well as gender. It may first be helpful toconsider the quality of information available and whether it is adequate forcarrying out a wider review. It may also be appropriate to seek advice from theCommission for Racial Equality and the Disability Rights Commission. Public sector organisations obliged by the Race Relations (Amendment) Act2000 to adopt an Equality Scheme should ensure the pay review deals with anypay gaps between workers from different ethnic groups as well as genderdifferentials. Step 2: Employers need to do one or more of the following checks: – Whether men and women are undertaking ‘like’ work – Work rated as equivalent – Work of equal value These checks determine where men and women are doing equal work. They arethe foundation of an equal pay review (Reference manual p20). Employers who do not have analytical job evaluation schemes designed withequal value in mind will need to find an alternative means of estimatingwhether men and women are doing equal work. The EOC Equal Pay Review Kitincludes suggestions on how this can be achieved. Employers who do use suchschemes need to check their scheme has been designed and implemented in such away that it does not discriminate on grounds of sex. Step 3: Employers need to collect and compare pay information for men andwomen doing equal work by: – Calculating average basic pay and total earnings – Comparing access to and amounts received of each element of the paypackage To ensure comparisons are consistent, when calculating average basic pay andaverage total earnings for men and women separately, employers should do thiseither on an hourly basis or a full-time salary basis (grossing up or down forthose who work fewer, or more, hours – excluding overtime – per week than thenorm). Employers then need to review the pay comparisons to identify any gender paygaps and decide if any are significant enough to warrant further investigation.Generally it is suggested that differences of 5 per cent or more, or patternsof difference across pay comparisons of 3 per cent or more should be regardedas needing exploration and explanation. It is advisable to record all thesignificant or patterned pay gaps identified. Step 4: Employers need to: – Find out if there is a genuine reason for the difference in pay that hasnothing to do with the sex of the jobholders – Examine their pay systems to find out which pay policies and practices arecontributing to any gender pay gaps Pay systems vary considerably. Those that group jobs into pay grades orbands have traditionally treated jobs in the same grade or band as being ofbroadly equal value, either because they have been evaluated with similarscores under a job evaluation scheme, or because they are simply regarded asequivalent. However, recent years have seen a trend towards structures with fewer,broader grades or bands and greater use of performance pay and market factors.A single broad band or grade may contain jobs or roles of significantlydifferent value because they encompass a wide range of job evaluation scores.This, coupled with a wider use of other determinants of pay and more complexmethods of pay progression, means it is important for employers to check allaspects of the pay system from a variety of standpoints – design, implementation,and impact on men and women. The EOC Equal Pay Review Kit provides details onwhat to look for. Step 5: If there are gaps between the sexes’ pay for which there isno genuine reason, employers will need to make the necessary arrangements toprovide equal pay for current and future employees. Employers who find no gapsor who find gaps for which there are genuine reasons should nevertheless keeptheir pay systems under review by introducing regular monitoring. This willensure the pay system remains free of sex bias. Find out more… on the EOC code of practice at www.eoc.org.ukCase study: developing an action planCompany A carried out an equal payreview because it was proud of its reputation as an employer of choice. The equal pay review was held as part of the ongoing managementof the reward structure. The review revealed a gender pay gap of 9.5 per centin the bottom grade and 7.1 per cent in the top grade. Reasons for the gender pay gap: – Job segregation– Lower starting salaries on promotion – Lack of structured progressionWith trade union support the company is working towards closingthe gender pay gap with new policies on progression and salaries on promotion.In 2001 the company publicly set aside a sum of money to narrow the pay gap.Case study: who should be involvedCompany B decided to carry out anequal pay review because it was proud of its stance on diversity.The company decided it had enough in-house expertise to enableit to carry out an equal pay review without the assistance of external payconsultants.The company decided the internal audit team would collate andanalyse the data, then produce a report for the human resources team. This teamwould implement any changes in policy and practice.It decided it would involve the workforce at an early stage andbegan by holding an early meeting between senior managers and the trade union. It also decided to develop a communications strategy to keepthe workforce informed of developments, thereby encouraging ownership of theprocess and to help the company manage workforce expectations. Comments are closed. Previous Article Next Article Reviewing the situationOn 1 Feb 2003 in Personnel Today Related posts:No related photos.