All employers are under a legal duty to provide men and women with equal pay for doing equal work. At the start of a business venture, this is usually an easy exercise to carry out but as businesses grow, and pay decisions are delegated, the potential for pay grades to become unlawful arises. Employers can avoid this by carrying out continual reviews of the processes for awarding pay in the business and can also carry out an equal pay audit.
Equal pay audits are used to compare pay within the organisation. The purposes of the audit are to identify any differences in pay for equal work, to examine the causes of the difference and to commit to put right any unjustified differences.
The first step in carrying out an audit is to decide how wide the scope of the audit will be. Employers can choose to audit everyone in the organisation at the same time or take a structured approach, for example auditing one department at a time. They will also need to consider what information they need to collect and this should include, as a minimum, all elements of pay, gender, job, pay band, hours worked and length of service.
The difficult part of carrying out an audit is usually determining where men and women are engaged in equal work. The law covers three different types of equal work and includes: 'like work' where work involves similar tasks, similar skills and has differences which are not of practical importance; 'work rated as equivalent' where a job evaluation scheme has graded work as equal; and 'work of equal value' where work is none of the other two options but has equal effort, skill, decision-making, responsibility etc. Employers who are having difficulty with this can choose to have a job evaluation carried out to determine the equivalence of work in their business.
Once equal work has been established, the pay information needs to be collected and compared. This is usually done by calculating the average pay and then calculating the difference between the average pay received by men and women doing the equal work. If this calculation shows there are differences in pay between genders, then the cause for the difference needs to be established. Where there is a genuine material reason for the difference that is unrelated to gender, the difference will be justified and can continue. In order to be justified, this reason has to be the real reason for the difference and not just a pretence that can explain the difference.
Where the difference cannot be justified and this is due to gender, employers need to be setting a plan in pace to tackle the pay difference. Easy steps to implement are to increase pay to those who are disadvantaged, review policies and procedures for awarding pay increases and to introduce an equal pay policy.