What is an Equal Pay audit?
An equal pay audit helps a company identify whether or not they are complying with their equal pay obligations.
Men and women in the same employment performing equal work must receive equal pay. This is set out in the Equality Act 2010 and is a legal requirement.
An audit gives the employer an opportunity to eliminate any instances of unequal pay that cannot be justified.
Benefits of carrying out an equal pay audit
Pay arrangements are frequently complex and there may be historical factors that can give rise to unconscious differences in pay – this may not be obvious.
Taking the steps to carry out an equal pay audit will help employers:
- identify, explain and, where required, correct any pay disparity
- demonstrate a transparent and fair approach to pay and reward
- prove to employees and future employees that the company is committed to equality
- demonstrate to other businesses that they are a transparent and fair business.
Equal Pay -vs- the Gender Pay Gap
Equal pay rules are a very different issue to gender pay reporting, although both place certain legal requirements employers have to fulfil.
These are two separate issues and the infographic below illustrates the differences between the two.
Equal pay is a legal obligation and getting it wrong can be a significant and costly risk for an organisation. Whether you pay for performance or contribution / skills development, it is vital that employers ensure that pay and bonus schemes are non-discriminatory.
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 audit will assess and compare the compensation plans for protected groups doing equal work in your company, and identify any issues, giving an employer chance to rectify them. You and your employees will be confident that the company’s compensation and reward package is fair, and you have protection against the risk of staff members bringing a claim.
What is involved in an the equal pay audit process?
The five steps in an equal pay review process:
- 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
This is covered in more detail in a recent blog post.
While employers can do all these steps in house, in practice, most employers choose an external provider such as 3R to conduct an audit on their behalf. We are specialists in this area and have worked with many of the UK’s leading employers.
Using an external consultant is often quicker, completely unbiased and encourages trust among your workforce.