What is equal pay, what are the laws surrounding it and how can I tackle it?
What is it?
When people refer to ‘equal pay’, they are talking about when two people doing equal work for the same employer are not receiving the same level of compensation. This is seen as being the result of the one receiving less money being from a protected characteristic, most commonly women.
Equal pay does not just refer to the base salary or wage but all other forms of compensation, terms and conditions. These include pension, working hours, annual leave, holiday pay, overtime pay, redundancy pay, sick pay, bonuses and benefits.
Are there laws relating to equal pay?
The Equality Act 2010 strictly outlines that a lack of equal pay is a form of discrimination. That means that someone could claim discrimination against your company if there is evidence that they are being unfairly compensated in comparison to someone else in the company.
This law does not just refer to full-time employees, it also includes: workers, apprentices, agency workers, part-time, temporary contractors, and the self-employed.
How can I tackle it?
First and foremost, you need to identify it. This is usually the most difficult part, as most companies don’t have multiple employees doing the exact same job. As such, there are a few different considerations that employers can use to better grasp the meaning of equal work.
First, you can compare two employees if the role and skills required are the same or similar, which is referred to as ‘like work’. This is the most obvious type of equal work but is not very useful for small-medium size enterprises.
Second is ‘work rated as equivalent’ in which the level of skill, responsibility and input required to complete the work are the same, although the skills themselves are not necessarily the same or similar.
Last is similar to the second but is where the roles are completely different: you can consider two employees are doing ‘work of equal value’ when the level of qualifications, training or demands of the working conditions are the same.
Once you have identified any potential examples of unequal pay you should set to immediately rectifying their contracts. No matter how much it costs to increase the salary or benefits of an employee, it is far less than losing a discrimination claim.
Next, it is essential that you research into how one employee ended up earning more than another, despite doing equal work. This includes investigating your company culture and any unconscious biases, with particular scrutiny of those in senior positions who have an influence on promotions, hiring and pay rises.
Are there any times where unequal pay is not breaking the law?
There are examples allowed in the Equality Act 2010 where people are doing equal work but have unequal compensation. This is where there are other circumstances that may influence their pay or benefits but this cannot be related to their gender, identity or belonging to a particular social group.
Some examples include: where someone’s skills are not of a higher level but are in shorter demand, such that they are given extra compensation as people with their skills are more difficult to recruit; if their living conditions are different, such as where they have to live in a more expensive area to carry out their work, so their pay appears unequal but is actually equal; they take on undesirable work, such as doing the night shift, but the different pay grades can only be acceptable if the option of undesirable work was declined by the other employee.