EQUAL PAY
High-risk grading and pay practices
The Equality and Human Rights Commission has published a new guide for employers on “high-risk pay systems” - precisely the types of scenarios that are increasingly winding up in court - and how to avoid them.
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According to the Commission, high-risk practices include:
lack of transparency or secrecy over grading and pay
discretionary pay systems – for example, merit pay and performance related pay
non-payment of bonuses or other incentive payments on maternity leave
different non-basic pay terms and conditions for different groups of employees – for example, bonus payments, different overtime or unsocial hours provisions
more than one grading and pay system within the organisation
long pay scales - more than six incremental points per scale or more than 10% from the minimum to the maximum of each pay scale
overlapping pay scales or ranges, where the maximum of one pay scale or range is higher than the minimum of the next higher pay scale or range, including broadbanded structures where there are significant overlaps
managerial discretion over starting salaries
market-based, including “job family”, pay systems
job evaluation system which has not been kept up to date
indefinite or lengthy pay protection policies.
Risks of equal pay challenge generally arise, not out of any intention to discriminate, but through pay systems not being kept under review and up to date. Symptoms of a high-risk pay system include pay drift, or employees regularly querying pay anomalies.
The guide examines each of these practices in turn and advises employers how to minimise the risk of having claims taken against them. The Commission also sets out the key features of a pay system that demonstrably provides equal pay for equal work.
Want to know more?
Title: Equal Pay in Practice: High risk grading and pay practices, Equality and Human Rights Commission, March 2009.
Availability: You can view the guide online by clicking here.
The Equality and Human Rights Commission is a statutory body established under the Equality Act 2006, which took over the responsibilities of Commission for Racial Equality, Disability Rights Commission and Equal Opportunities Commission. To find out more visit www.equalityhumanrights.com.