Equal pay reviews in practice

EQUAL PAY AUDITS

Equal pay reviews in practice

A new study published by the Equal Opportunities Commission examining organisational experiences of carrying out equal pay reviews has revealed that where unjustifiable gender pay gaps were identified, the most common causes included line management discretion over pay, market-related pay differences, pay protection or red-circling and access to overtime payments.

Undertaken by the Institute for Employment Studies, this in-depth case-study report also found that a number of the 15 organisations participating in the research embarked upon equal pay reviews without having an understanding of the purpose of those audits, or the possibility that a review may identify pay gaps that require action.

Use of job evaluation

Determining where jobs are equal and so where pay gaps between women and men should be justified and/or rectified, should be a central element of any equal pay review. The EOC Pay Review Kit advises that the most reliable way of assessing whether jobs are of equal value is to use a single job evaluation scheme covering the whole of the workforce.

But the research discovered that only a minority of equal pay reviews involved the introduction of a new, specially designed job evaluation system for the purpose of establishing a basis for equal work comparisons. "In most cases, the process for determining which jobs were equal had serious inadequacies," the report says.

Key finding of case-study research

• In most cases, a senior reward expert within the organisation concerned led the equal pay review. Diversity specialists were most often involved as part of the team or working group supporting the equal pay review.
• The extent to which organisations that state that they use the EOC Pay Review Kit actually follow the five-step model, or are advised by the accompanying guidance notes, varies enormously.
• A sizeable minority of case-study organisations had used external consultancy or other support in conducting their review.
• Most of the case-study organisations limited their audits to a comparison on the basis of gender and did not include other possible areas of pay inequality such as age, disability or ethnicity.
• The majority of organisations had identified equal pay gaps of 5% or greater between the pay of men and women doing equal work.

 

Pay equality check An equal pay review should be systematic and comprehensive. It requires detailed analysis and a rigorous approach to diagnosis. Positive actions must flow from the analysis and diagnosis which will address the issues that have been identified. As part of the first stage of data analysis required by the equal pay review process, a basic analysis is made of the relative rates of pay for men and women carrying out equal work, that is like work, work rated as equivalent or work of equal value. But how do you establish who is doing equal work -- like work, work rated as equivalent or work of equal value -- the foundation of an equal pay review? Like work -- identify jobs anywhere in the grade structure or structures involving work carried out by both men and women where the work is the same or broadly similar. Work rated as equivalent -- if a job evaluation scheme is in operation, identify the jobs which have been evaluated in the same range of scores or at the same level. Work of equal value -- this can only be tested properly if the organisation applies some form of job comparison technique in practice this requires categorising jobs into levels using a job evaluation scheme which is in itself non-discriminatory. Equal value across occupational groups -- use a job evaluation scheme which covers all or a number of occupational groups (if available) to identify jobs of equal value in each group. The test for equal work is only fully complete if a work rated as equivalent and an equal value test can be made as well as a like work comparison. It is not enough to conduct a like work test. This is why some form of job evaluation is needed -- even if it is not a scheme that the organisation plans to use continually. Employers who do not use analytical job evaluation need to find an alternative means of checking whether men and women are doing work of equal value. Source: e-review equal pay toolkit, available from www.e-reward.co.uk

 

One in five organisations have completed pay audits

A second, companion study, commissioned by the EOC and consisting of a quantitative survey of 650 organisations. Conducted by IFF Research, found that 21% of organisations had completed an equal pay review by 2004.

But perhaps the most striking finding to emerge from the study was that the vast majority of organisations -- as many as 68% of respondents -- had no plans whatsoever to conduct an equal pay review.

Want to know more?

Equal Pay Reviews in Practice
By Fiona Neathey, Rebecca Willison, Karen Ackroyd, Jo Regan and Darcy Hill.

Case-study research which examines organisational experiences of carrying out equal pay reviews. All 15 case studies conducted by the Institute for Employment Studies contained at least 250 employees.

To download this 81-page PDF report visit the EOC web site at www.eoc.org.uk/EOCeng/dynpages/researchTopic_Pay.asp

 

Equal Pay Reviews Survey 2004
By Stefan Schafer, Mark Winterbotham and Fiona McAndrew.

Survey research which examines the extent of equal pay review activity amongst employers in Britain. Telephone survey of 650 organisations undertaken by IFF Research between October and November 2005.

To download this 82-page PDF report visit the EOC web site at www.eoc.org.uk/EOCeng/dynpages/researchTopic_Pay.asp

Posted 7 September 2005