Set the right pay rates

Equal pay for work of equal value

The law says that men and women are entitled to equal pay for work of equal value. Equal pay includes basic pay as well as other contractual conditions of employment, eg hours of work, bonuses and pension contributions.

Additionally, since December 2003 new employment equality legislation protects people from direct and indirect discrimination, harassment or victimisation throughout the employment relationship, including pay, terms and conditions, and promotion on the basis of sexual orientation or religion. Discrimination is prohibited even after the employee leaves, eg giving unfair references.

Employees have the right to ask their employer for information to help them work out whether they have received equal pay, and if not, why.

Workers who believe they haven't received equal pay may take the case to an employment tribunal, which may use the information in the questionnaire. In applications relating to equal pay, a worker will need to compare their pay to the pay of someone of the opposite sex. As of 1 October 2004, there are changes to how employment tribunals deal with complex equal value cases. The changes are designed to streamline the system and reduce delays on dealing with large and complex cases. Also, as of 1 October 2004, there are restrictions on when a tribunal may move not to consider an equal value claim. Read about the new procedures for equal value tribunal cases at the Women and Equality Unit website.

Measuring the value of work is usually done by job evaluation. This compares factors such as skills, effort and decision-making involved in a job. The evaluation must analyse a job by preset factors that apply to all the jobs under evaluation rather than looking at each job in its entirety. Avoid basic errors such as assuming jobs which are being done part time are easier. Read about job evaluation and equal pay on the Acas website.

If you carry out regular reviews of your pay system and follow the guidance on equal pay reviews at the Equal Opportunities Commission (EOC) website, you can build and maintain a robust, fair pay system which stands up to scrutiny and is less susceptible to claims for equal pay. Get advice on good equal pay practice at the EOC website.

Download a report on providing equal pay from the EOC website (PDF).

Subjects covered in this guide

• Introduction
• Pay rate systems
• Setting up a new pay rate system
• Making pay comparisons
• Equal pay for work of equal value
• Reviewing pay rates and systems
• Commission, bonuses tips and gratuities

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