18th September is international equal pay day. The 1970 Equal Pay act came into law to prevent discrimination with regards to terms and conditions of employment for men and women. It has since been superseded by the Equality Act 2010 to encompass not just equal pay but equal rights for all.

Equal Pay In The News

Unfortunately, even in 2024 people are still not being paid equal pay. A recent case involving the retailer Next, has brought to light a failure to pay equal pay. It was found that employees who work in the warehouses and employees who work in the stores were not paid equally. The warehouse employees are predominantly male, and the store employees are predominantly female. The tribunal ruled it was indirect discrimination against the female colleagues and so ordered Next to award them all back pay. This is likely to cost the company approximately £30m.

How to Provide Equal Pay

You might assume that you are providing equal pay, however many common practices can lead to risks with equal pay, such as:

• Lack of transparency in your pay and grading system.
• Discretionary pay systems.
• Out of date job evaluations.
• Non-payment of contractual bonuses during maternity leave.
• Different non-basic pay terms and conditions for different groups of employees (for example bonuses or overtime).
• More than one grading and pay system within a business.
• Long pay scales.
• Overlapping pay scales and broad-banded structures.
• Managerial discretion over starting salaries.
• Market-based pay systems not underpinned by job evaluation.
• Indefinite or lengthy pay protection policies.

Take Action if you Find a Problem

Create an action plan to address any issues around equal pay. Effective action plans detail how you will fix the issues with clear timescales and reasons why this is the soonest it can be done.

• Achieving and maintaining equal pay requires a fair, transparent and up-to-date pay system. To do this:
• Everyone should understand the pay and benefits system.
• Pay systems should be as simple as possible and therefore easier to manage and understand.
• The core elements of a fair pay system include:
• Producing an equal pay policy.
• Creating clear and transparent job descriptions and titles.
• Undertaking a job evaluation scheme.
• Looking at your grading structures and systems.
• Other things you could consider for a fair pay system include:
• Checking starting salaries.
• Ensuring equality in competence pay.
• Dealing with any problems in performance related pay.
• Making sure there is equality in bonus payments.
• Eliminating gender bias from ‘working time’ payments.
• Limiting managerial discretion over all elements of the pay package.
• Considering market forces.
• Carrying out an equality impact assessment.

Why Equal Pay is Important

It is important to provide equal pay in order to comply with the law by identifying, explaining and eliminating unjustifiable pay gaps, and to contribute to a fairer society in which everyone has equal opportunities.

• If you do not act lawfully, you are at risk of:
• Expensive legal fees.
• Lost productivity.
• Damaged employee relations and low staff morale.
• Cost of tribunal decision.
• Loss of reputation.

Not Just Equal Pay

Equal pay also applies to contractual terms and conditions, such as:

• Basic salary.
• Pension.
• Working hours.
• Annual leave allowance.
• Holiday pay.
• Sick pay.
• Overtime pay.
• Redundancy pay.
• Performance related pay i.e. bonuses.
• Benefits – company car, gym membership etc.

It is also worth noting that equal pay and gender pay are not the same thing.

 

If you want to ensure you are compliant and won’t end up breaking the law, you know where we are!!

How Hallidays HR can help

If you would like to discuss any of the above in more detail, then please do not hesitate to contact us on 0161 476 8276 or email hr@hallidayshr.co.uk. And of course, visit our Website: Hallidays HR Website and our LinkedIn page: Hallidays HR LinkedIn