Assessing the gender pay gap — ways to get to equal payOriginally published: August 2017 | Last reviewed: August 2017
Equal pay means that wages are set according to skills and performance, and not affected by a person's gender, ethnicity or other aspect of personal background. Equal pay doesn't simply mean salary, either — it covers all contractual terms of employment, including bonuses, holiday entitlement, pension contributions and so on.
Pay differences occur with varying levels of experience, education and length of time in the workforce. But even accounting for these factors — and noting that it's a legal requirement to provide equal pay — pay gaps persist. On average, U.K. women in paid work earn about 18 percent less per hour than their male colleagues, according to the Institute for Fiscal Studies.
While the issue affects all sectors, charities arguably have a particular duty to treat people fairly and to set a positive example. Yet, according to a survey by recruitment specialists TPP, women employed by charities earn about 12.4 percent less than men on average. And though nonprofits tend to be staffed by a majority of women, senior-level jobs are predominantly held by men.
There are indications of a shift, however. A 2017 ACEVO study found that female charity CEOs outnumbered males for the first time in 17 years of research, and that the pay gap has also narrowed — with female CEOs now earning on average 11.6 percent less than their male counterparts.
What the law says on pay equity
The Equality Act 2010 — which applies to England, Scotland and Wales — makes it unlawful to discriminate on the grounds of nine protected characteristics:
- Gender reassignment
- Marriage and civil partnership
- Pregnancy and maternity
- Religion or belief
- Sexual orientation
In the U.K., equal pay usually refers to sex discrimination in the context of ensuring that women earn the same pay as men.
Paying younger workers less than their older counterparts can often be justified — but on the grounds of a difference in relevant experience, rather than age. At least one active campaign, Wages Not Based On Ages, is focused on ensuring workers younger than 25 earn the same minimum wage as older colleagues.
Equal pay is also relevant to part-time workers, who except in justifiable circumstances should get the same rates of pay as full-time colleagues doing the same work, including sick pay and maternity/paternity leave.
New legislation on reporting gender pay gaps
Legislation introduced in 2017 requires employers across all sectors (including nonprofits) with 250 or more employees to publish statutory calculations every year showing the pay gap between their male and female employees. In the private and voluntary sectors, employers now have until April 2018 to publish this information. Public sector regulations are awaiting approval, but are expected to follow similar timescales (that is, one year to implement).
The results must be published on the employer's website and on a government website. To make sure you're in compliance, check GOV.UK guidance on what employers must publish or see Acas guidance on gender pay gap reporting.
While this law applies only to large employers, it may have a knock-on effect of prompting a culture of greater transparency and setting the bar higher for all employers. NCVO, for example, has stated that it will publish gender pay information in 2018 and encourage other charities to do the same, according to Civil Society News.
The benefits of pay equity
Few nonprofit leaders today would argue that pay equity is a bad thing. If you find yourself still trying to justify potential additional cost and administrative burdens of changing your existing systems, consider the benefits from an employer's perspective:
- Avoiding discrimination claims
- Improved reputation
- Improved staff satisfaction and morale — and therefore retention
- Greater workforce diversity, due to an increased appeal to diverse candidates
Review your current situation
The Equality and Human Rights Commission provides tools for organizations to self-assess pay equality. There are versions for small organizations (up to 50 employees) and large organizations (50 or more employees).
Steps to improvement
If you've identified some gaps, you can take steps to build a culture of pay equity:
- Create an equal pay policy that commits your organization to providing equal pay. Include specific targets and clear accountabilities, and set out how you'll monitor and review implementation. Rather than a one-off action, implementing equal pay is an ongoing process.
- Monitor employee contracts. At least once a year, monitor employee contracts to ensure that male and female employees in full-time or part-time employment are getting the same pay, benefits and terms and conditions in their employment contracts where they're doing equal work. Involve the board in these assessments.
- Link compensation to market value. When deciding how to compensate new hires, don't focus on their salary history or negotiating skills. Instead, find out what other similar organizations are paying for similarly qualified people in a comparable position — use sector salary surveys or online job adverts for your research. Also consider these best practices for employee compensation.
- Know the laws. Work with a legal or HR adviser to review laws for any provisions that affect employee compensation. Make appropriate adjustments based on the findings, being sure to document your reasons for making any changes.
- Consider reporting on your gender pay gap. To narrow the gap in opportunity more broadly, look beyond pay and related benefits. For example, offer more flexible roles at a senior level and other family-friendly policies to all employees.
This article draws on the expertise of Work LDN, a London-based company that provides human resources outsourcing and specialist recruitment services.