Pay equity: equal pay is not the pay gap, and what an audit actually involves

An organisation publishes a small gender pay gap and concludes it is fine. It may not be. The two things are measured differently, mean different things, and one of them is a legal right.

This article separates them, explains what pay equity analysis involves, and covers the practices that prevent problems before an audit finds them.

An audit starts with knowing who does what, accurately. See how New Dynamics org charts keep roles and reporting lines current.

Two different things

Equal pay is a right. Acas states it simply: "by law, men and women must get equal pay for doing equal work." It belongs to individuals, it is comparative, and it covers not only pay but "contractual terms and conditions".

The gender pay gap is a statistic. GOV.UK's statutory guidance on gender pay gap reporting requires "any employer with 250 or more employees on a specific date each year (the 'snapshot date')" to publish the "mean (average) and median gender pay gap for hourly pay and bonus pay", the "percentage of men and women in each hourly pay quarter", and the "percentage of men and women receiving bonus pay".

The gap describes the distribution of men and women across a workforce. It can be large because senior roles are held mostly by men, with every individual paid lawfully. It can be small while two people doing equal work are paid differently. Our HR metrics post covers why the gap is one of the few measures with a published method.

What "equal work" means

Acas's guidance on equal pay defines it as "work that equal pay law classes as the same, similar, equivalent or of equal value".

That last category is the one people underestimate. Work of equal value is not the same job, it is different work judged to make comparable demands. Establishing it is a matter of evaluation rather than job title, which is why the audit method depends on job evaluation rather than on comparing people with the same label.

This is general information rather than legal advice; the Acas helpline advises on individual cases and the EHRC publishes detailed guidance.

What a pay equity analysis involves

Acas's guidance on employer responsibilities describes the method, noting that the EHRC "recommends different ways of checking for equal pay issues" and that it "depends on the size of your organisation".

With "50 or more staff", you "can check for issues by doing an equal pay audit". You can audit "the whole organisation, or just one department to start with if it's the first one you've done". The steps begin:

1. Check if there are people doing "equal work", the same, similar, equivalent or of equal value.
2. Carry out job evaluations, where needed, "to measure the value of different jobs and identify any that count as 'equal work'".
3. Gather the pay details for the people doing equal work, including contractual terms rather than salary alone.
4. Share the results, Acas says "you should share the results with staff included in the audit".

That fourth step is the one organisations quietly drop, and it is the one that makes the exercise credible. Our job evaluation guide covers the second step, which is where most of the work sits.

The practices that prevent it

Acas is specific about prevention. Employers "can prevent many equal pay issues by being clear and open with staff about pay and contractual terms and conditions", and lists four practices:

• Have an equal pay policy.
• Have up to date job descriptions "that accurately describe the work that staff do".
• Make sure that men and women who do the same work do not have different job titles.
• Be consistent when deciding pay and contractual terms, "for example have one pay structure for the organisation and limit who can decide on salaries for new staff".

The third is the cheapest to fix and the most commonly created. Different titles for the same work usually arise from a recruiting manager wanting to offer something, or from historical drift, and they conceal an equal pay question inside an organisation chart.

The fourth names the real cause of most drift: too many people able to set a salary, with no structure to set it against.

What an equal pay policy says

Acas says an equal pay policy "can help you be clear and open with staff about your policy on pay and other terms and conditions", and should say how you:

• "will try to achieve equal pay";
• "will check whether the policy is working";
• "will deal with any complaints about equal pay";
• "are committed to resolving any unequal pay issues in your workplace".

It "should be clear and easy for staff to understand", and where there is "a trade union or employee representatives, you should agree the policy with them".

What to do with the findings

An audit that finds differences leaves you with a decision rather than a report. Three principles keep it honest:

1. A difference is not automatically a breach. Material factors can explain a difference; the question is whether the explanation is genuine and not itself tainted by sex.
2. Write the explanation down at the time. An explanation constructed later, in response to a query, persuades nobody.
3. Fix what you cannot explain, and say when. Identifying a problem and leaving it is worse than not having looked, because now it is documented.

Be careful about the framing of any correction, too: a rise described as a cost-of-living award when it is an equal pay correction confuses two different decisions. Our post on the cost of living adjustment covers keeping those separate.

Frequently asked questions

What is pay equity?

Paying people the same for equal work regardless of sex, as equal pay law requires. It is about individuals and comparisons between them, and it covers contractual terms and conditions as well as pay.

What is the difference between equal pay and the gender pay gap?

Equal pay is a legal right about individuals doing equal work. The gender pay gap is a statistic describing the distribution of men and women across a whole workforce. A small gap does not prove equal pay compliance, and a large gap is not itself a breach.

What counts as equal work?

Acas defines it as work that equal pay law classes as the same, similar, equivalent or of equal value. Work of equal value is different work judged to make comparable demands, which is established by job evaluation rather than by job title.

What is an equal pay audit?

A structured check for pay differences between people doing equal work. The EHRC recommends one for employers with 50 or more staff, and it can start with a single department. Acas says the results should be shared with the staff included in it.

How do you prevent equal pay problems?

Have an equal pay policy, keep job descriptions accurate and current, avoid giving different job titles to men and women doing the same work, and be consistent about pay decisions, one pay structure, and limits on who can set salaries for new starters.

Does equal pay law cover more than salary?

Yes. Acas states that equal pay law applies to both pay and contractual terms and conditions, so benefits and other contractual entitlements fall within it rather than sitting outside the comparison.

Should an equal pay policy be agreed with a union?

Where an organisation has a trade union or employee representatives, Acas advises agreeing the policy with them. The policy should also be clear and easy for staff to understand.

Your next step: look for the cheapest problem first

1. List everyone doing the same work and check whether their job titles match.
2. Count how many people can set a salary for a new starter.
3. Pick one department and check pay for people doing equal work.
4. Decide, before you start, that you will share the results.

For the evaluation that any audit depends on, read and download our job evaluation guide. The guide is free to read, and the PDF uses our short download form.

Want an accurate picture of who does what before you compare pay? Book a New Dynamics demo and bring your current structure. You can also email contact@new-dynamics.com.