Employers in all sectors benefit by providing equal pay. It is not just a legal requirement under the Equality Act 2010 (the Act), but also an important step towards a fairer Britain.
Paying women less than men has far-reaching implications for society by contributing to the gender pay gap, women’s lower pension contributions and their higher incidence of relative poverty in later life.
Pay is also one of the key factors affecting motivation and relationships at work, ultimately contributing to your commercial success, so it’s important to reward all employees fairly.
The business benefits
Pay systems that are transparent and reward the entire workforce fairly:
- send a positive message about your organisation’s values
- increase efficiency and productivity by attracting the best employees and reducing staff absence and turnover
- form a key part of your organisation's corporate social responsibility - increasingly important for many stakeholders
Providing equal pay for all employees will also reduce the risks of facing an equal pay claim and help avoid:
- Expensive legal fees which could cost thousands of pounds
- Lost productivity as management gather evidence and deal with tribunal hearings
- Damaged employee relations and low staff morale
- Cost of tribunal decisions - in addition to their own legal fees, employers who lose have to pay the claimant a financial award, which could include up to six years’ back pay and, in some circumstances, the claimant’s legal fees
- Loss of reputation with customers, shareholders and potential employees
- Possible further audits ordered by a tribunal
Apart from helping you to meet your legal obligations on equal pay, carrying out an equal pay audit or review can have other beneficial effects. For instance, it could reveal other equality issues in your organisation, such as under-representation or job segregation of people with certain protected characteristics.
If so, you may want to examine other employment practices to ensure they are free from discrimination of all types. These might include recruitment processes, approaches to training and development and succession planning.
How Transport for London (TfL) benefits from equal pay
TfL undertakes an equal pay audit every two years following the Equality and Human Rights Commission’s model. This compares the pay of staff doing the same work and looks at sex, ethnicity and whether employees are full or part-time. It also considers performance-related pay and rewards for senior managers.
TfL found that proactively providing fair pay brought significant benefits to the organisation. Employees feel more valued, trust the organisation and in return are more engaged with their work.
Regular pay audits have also helped TfL avoid spending time and resource fixing pay discrimination through legal action. Equal pay is embedded into the business culture as a core value and business function.
It is considered part of a manager’s role and is given due weight and consideration when recruiting new staff, setting salaries and giving promotions.
These pages focus on equal pay between women and men because the equal pay provisions of the Equality Act 2010 relate specifically to sex discrimination in pay. However, pay systems may also be challenged under the Equality Act 2010 if they discriminate because of race, age or other protected characteristics.
Last updated: 09 Sep 2020