from IES newsletter In Brief, no. 131

Can equal pay reviews push equality?

Fiona Neathey

The Equal Pay Act has been around for over three decades, but women’s pay is still almost 19 per cent behind men’s. Recent years have seen a number of initiatives to encourage employers to address discrimination within their own pay policies and practices.

The government’s response has been to request all civil service departments and agencies to undertake equal pay reviews, and to include potential discrimination on race and disability. Elsewhere in the public sector, higher education institutions have been prompted to conduct equal pay reviews, and a pay commission has been formed in local government, that also covers gender and race issues.

In the private sector we have undertaken a number of equal pay reviews for individual organisations, but our research for the Equal Opportunities Commission found that only one-third of organisations had, or planned to, conduct equal pay reviews in the near future. However, there are lessons for future reviews:

• There is often a gap between pay and personal data in the HR information system. Absence or unreliable key data can compromise the value of equal pay audits.
• The difference between policy and practice. What organisations might aspire to do is not always delivered.
• A tension between granting greater flexibility to line managers to manage discretionary rewards and the need for equality. The more freedom managers have to reward performance or set starting salaries, the more risk of inequalities.
• If a single non-discriminatory job evaluation system across the organisation is not used fairly to determine the grading of jobs, then its advantages (eg, greatly simplifying the equal pay review process; offering defence against equal pay claims) may be undermined.
• Biases in performance assessment might read through into pay if not picked up at source. Few organisations monitor the effectiveness, let alone fairness, of their pay systems.
• New managers will have often missed equality training given when old policies were new. While organisations are often good at communication and training at the launch of a policy change, this is rarely sustained.

Conducting equal pay reviews can be costly to do properly. The results can be dispiriting when they identify risks and potential problems, which can be expensive to put right. Yet building equal pay considerations into pay structure reviews may yield multiple benefits, and avoid costly and disruptive equal pay claims in the future. Systematic equal pay reviews may address disparities beyond the considerations of pay equality. In addition, taking action in this area may boost an organisation’s record as a leading employer, whereas lack of action, in the context of growing debate, could lead to employee demotivation and disillusionment.

Monitoring Progress Towards Pay Equality, Neathey F, Dench S, Thomson L; EOC Research Discussion Series; March 2003