Although the EOC Equal Pay Review Toolkit describes a five-stage process, there are essentially three main stages to an equal pay review:
1. Analysis: this involves collecting and analysing relevant data to identify any gender (pay) gaps.
2. Diagnosis: the process of reviewing gender gaps, understand- ing why they have occurred and what remedial action might be required if the differences cannot be objectively justified.
3. Action: agreeing and enacting an action plan that eliminates any inequalities.
The remainder of this chapter describes briefly these main stages, and then looks in more detail at some analysis options, based around an organization’s existing approach to valuing jobs.
Stage one: analysis
This stage involves collecting and analysing pay and benefits prac- tices and policies in order to test the extent of any differences in pol- icy or application that might lead to unequal pay between men and women. There are three elements to this analysis stage:
1. Review the organization’s equal pay policy
This is the most straightforward part of the initial analysis. It involves establishing whether or not an equal pay policy exists. If there is one, the organization should:
ឣ compare the policy with the model policy set out in the EOC Code of Practice on Equal Pay(the policy is reproduced in Appendix 2);
ឣ examine the extent to which it has been communicated internally;
ឣ identify who is responsible for implementing the policy and what steps have been taken to ensure that it has been implemented.
Where there is no existing equal pay policy, the EOC model can be used as a basis for establishing one.
2. Pay analysis
This is about generating the first set of statistics that will help to indicate whether or not an organization may have an equal pay issue, and the extent to which further analysis will be needed. The analysis requirements are discussed later in this chapter.
3. Benefits comparison
This involves establishing the extent to which men and women have access to, and on average receive, equal benefits for equal work, such as pensions, sick pay, medical insurance, company cars and holidays. Benefits design, eligibility criteria and actual practice will need to be examined.
Benefits comparison is an essential part of the analysis phase because, although the publicity surrounding equal pay reviews focuses mainly on cash reward, equal pay legislation allows com- parison to be made in respect of any remuneration item. There is no
‘total remuneration’ concept in equal pay law. This means that an equal pay claim can be submitted in respect of any remuneration item, where an individual feels that they are not being fairly treat- ed in comparison with a colleague of the opposite sex doing equal work – even if their total remuneration package is worth the same.
Stage two: diagnosis
The aim of stage two is to establish the nature of any inequities and their causes with the intent of establishing whether the difference in pay is genuinely due to a material difference between the man’s and the woman’s jobs rather than due to their gender. The review should first seek explanations of why the gap exists and then estab- lish the extent to which the gap can be objectively justified. This stage involves delving into the data, using intuition and judgement about where to focus effort, in order not to be overwhelmed by the mass of options for further analysis.
If this diagnostic phase suggests that any pay differences are gen- der based, the remedial action needed to rectify the situation should feed into stage three. Appendix 3 gives examples of the types of analyses and issues that could arise from this diagnostic phase, together with the remedial actions that may be required.
Stage three: action
Any issues that have been identified in phase two must be reme- died. The course of action that will remove pay gaps must be defined, planned and implemented. The action plan should incor- porate proposals on:
ឣ introducing or amending an equal pay policy if necessary;
ឣ the steps required to remove pay gaps;
ឣ how future bias can be eliminated by changing the
processes, rules or practices that gave rise to unequal pay;
ឣ a programme for implementing change;
ឣ accountabilities for drawing up and implementing the plan;
ឣ how employee representatives or recognized trade unions should be involved in preparing and implementing the plan;
ឣ the arrangements for monitoring the implementation of the plan and for evaluating outcomes.
With respect to how long an organization should take to address any inequities, the answer depends on the scale of change that is needed; the causes and costs involved in rectifying inequities are wide and varied. However, the timetable should be realistic in the light of change required, while demonstrating an immediate inten- tion to implement change. In the interim the organization remains at risk of an equal pay claim – the intent to redress the difference is not sufficient to avoid a claim.
It is, of course, important to address both the cause and the effect of the inequity. For example, if the cause of pay differences within grades rests in an organization’s recruitment processes, the short- term remedy may be to rectify existing pay differentials – but to avoid the situation arising again, more fundamental issues will need to be addressed relating to the recruitment process, perhaps including actions such as manager training and generating new guidelines on how to set recruitment salaries.