Equal Pay Audits

Insight

Determining Like Work

Men and women in the same employment who are performing equal work should receive equal pay. If they aren’t paid the same, an employer must show that the difference in pay is not related to the sex (or other protected characteristic) of the claimant.

There are three types of equal work:

1. Like Work

   This is where work is broadly similar and the differences that do exist are not of practical importance in relation to the terms of the work. Practical importance refers to something that people do in practice as part of their job (such as additional responsibilities they have or skills they bring to bear on their work) and not just something in their job description. When comparing two employees using this criterion, it is important to consider the frequency with which differences in work occur in practice and the nature and extent of those differences.

   Employers should be cautious when using job titles to ascertain “like work”. As an example, an employer may have Heads of Department with varying levels of remuneration depending on accountability. A Head of Estate may have a smaller job size than a Head of Sales, and the two should not be compared as “like work”.

2. Rated as Equivalent

   This occurs if a job evaluation has rated two jobs as equivalent. It is important to note the job evaluation must itself be non-discriminatory and objective. Employees are likely to be doing work rated as equivalent where they have similar, but not necessarily the same, job evaluation scores and are in the same grade.

   If your grading structure is underpinned by job evaluation scores, and provided your grades are sufficiently narrow, you can compare the pay of men and women by grade. If you have a broad banded grading structure, you may need to drill down into zones or gates. It’s also important to look closely at grade boundaries. A woman at the very top of Grade 2 could have a job rated as equivalent to a man at the bottom on Grade 3. This is why it’s important in reward design to consider where grade boundaries are placed.

3.  Of Equal Value

   Work of equal value is work which is not the same and is not rated as equivalent, but is of equal value in terms of factors such as effort, skill and decision-making. Whether or not work is of “equal value” can only easily be identified using job evaluation, and if you don’t already use job evaluation it will be very difficult to include this consideration in an equal pay audit?

FAQ

We don’t use job evaluation. Can we still produce an Equal Pay Audit?

There will be some tests that you can do but the output of the audit will be limited. Try to find groups of staff in benchmark roles where you are fairly sure that the work they are doing is the same, and compare pay for men and women in the benchmark roles.

There are other indicators that you can look at, including the overall pay gap and the percentages of men and women in pay quartiles. Using grades for an analysis will not be robust unless you can demonstrate an analytical and objective method of grade placement. Without job evaluation, it’s more or less a foregone conclusion that the recommended approach to ensure equal pay for work of equal value will be to implement job evaluation in the longer term.