Having spent time collecting data and analysing the extent of a pay gap, it may come as a surprise to discover that if an organisation is serious about tackling it then further investigation will be necessary. Because the gender pay gap is an average figure, it tells an organisation very little about why a pay gap exists without drilling down any further. The regulations create a statutory floor and it is essentially up to employers to decide their own approach.
Conducting additional investigations not only provides a sufficient level of granularity to identify problem areas, but it also supplies additional material which can be included in the narrative, or explanation of why they have a pay gap.
In this update we suggest some additional steps employers may wish to consider.
The regional context
Organisations which operate across the UK and have employees based in London may want to account for regional variations in their gender pay gap. The statutory reporting requirements apply to each employer within a group context so separate reporting may be required in any event based on the corporate structure.
An equal pay review
One option is to carry out an equal pay review or a review based on grades within the organisation. A grade level review has the benefit of simplicity for comparative purposes, and of course over time it can be used to benchmark internal progress. An equal pay review carries additional benefits in terms of flushing out problems regarding potentially discriminatory pay practices. Employers will normally want to send the results of equal reviews to their external legal advisors to obtain the benefit of legally privileged recommendations, and to assist them in understanding whether there may be justifiable reasons for differences in pay between men and women, which may amount to a material factor defence.
So what is an equal pay review?
This is a more rigorous way of analysing pay, as opposed to calculating the gender pay gap.
There are five steps in the EHRC’s pay review process:
- Scoping the review.
- Identifying jobs involving similar levels of skill, effort, decision making, and knowledge (work of equal value), and who is doing those jobs.
- Comparing the pay of women and men doing like work (e.g. the same job), work rated as equivalent (only relevant if an employer has previously implemented a job evaluation scheme), and work of equal value (those jobs identified as similar under step 2).
- Identifying pay gaps and the reasons that the gaps exist.
- Eliminating those pay gaps that cannot satisfactorily be explained on grounds other than sex and establishing a policy of continuing pay reviews going forward.
Grade level review
Organisations may wish to start this process by conducting a lower level pay review by analysing the data based on what information is available - which is likely to be employee numbers and figures at grade level. This will not amount to a full equal pay review because there is no analysis of which jobs are truly comparable from an equal pay perspective. But this could be a starting point before taking a more informed view about what, if any, further review is required. It will also identify whether there is a progression issue by looking at the ratio of men to women through the various grade levels.
When conducting this type of review it is worth looking at the time periods that it takes for each person to proceed through the grade levels to understand if women are taking longer periods than men to reach a promoted post, before examining why this may be the case.
The duty to publish only covers the prescribed statutory information: not any of the additional measures mentioned above. In particular, employers will be reluctant to publish (or required to disclose) an equal pay review. It is certainly a document which would benefit from legal privilege.