Reward Consultant Rameez Kaleem, Director of 3R Strategy explains why equal pay and the gender pay gap are two separate issues and employers need to take steps to comply with both sets of regulations:
Whilst equal pay and the gender pay gap both relate to a disparity in pay between men and women, they are two very different issues.
Unfortunately, any distinction between the two often gets muddied in media coverage.
It is important for employers to understand the difference between the two, for two reasons,
- It is important for organisations to achieve gender equality, and as reward consultants, we are able to support them to do that, and
- We need to help business leaders understand the reasons behind the gender pay gap, and ensure that employers do not fall foul of equal pay legislation.
We have therefore put a handy infographic together explaining the difference between equal pay and the gender pay gap – and it is important to note that while the gender pay gap merely explains the difference between what men and women are paid for the same job, and the law is about reporting requirements, whereas equal pay is a legal obligation. Employers cannot afford to brush off either as mere ‘paperwork’:
Gender Pay reporting
The 2019 gender pay gap reporting deadline is now less than a month away.
Here’s a quick reminder of who needs to file a report, and when.
- Gender pay gap reporting is compulsory for private- and voluntary-sector organisations with more than 250 or more employees at 5 April 2018, and most public-sector organisations with 250 employees or more at 31 March 2018.
The snapshot dates for the 2018 round of gender pay gap reports are:
- 5 April 2018 for private companies and charities
- 31 March 2018 for public-sector organisations
The submission deadlines are:
- 4 April 2019 for private companies and charities
- 30 March 2019 for public-sector organisations
Organisations with fewer than 250 employees are not obliged to report on gender pay.
Equal Pay Audit
Equal pay is a legal obligation – getting this wrong poses a significant and costly risk for an organisation. This applies to bonus schemes as well as general pay.
A summarised in the infographic above, employers must give men and women equal treatment in the terms and conditions of their employment contract.
A recent case in October 2018 gave some clarification to this, when a long awaited Court of Appeal decision confirmed that predominantly female retail workers in ASDA stores were correct to compare their roles to predominantly male workers in the company’s depots. Following the ruling, the ASDA employees are likely to proceed with a claim which if successful, would see the company being liable for substantial payments of back pay, covering hundreds of workers over a six-year period.
In the light of this, it is recommended that all employers conduct an equal pay audit.
An equal pay audit will identify any potential risks and ensure that your pay practices are fair and meet the requirement of the Equality Act 2010.
The five steps in an equal pay audit process are:
- Decide the scope of the audit
- Determine where people are doing equal work
- Collect and compare pay data
- Establish the causes and justification for significant pay gaps
- Develop an equal pay action plan
Businesses often use an external reward consultant like 3R Strategy to assist with this – it costs less than you think and is far less expensive than getting this wrong.
If you need any help or advice on any aspect of pay and reward, please visit our website: https://3r-strategy.com or telephone 0203 8806650.