Equality and Human Rights Commission

This guidance has been produced in conjunction with the British Chambers of Commerce to make it easier for small and medium sized businesses to examine their pay systems to ensure they comply with equal pay laws.

Why do I need to check if I’m providing equal pay?

Women are entitled to equal pay with men doing equal work and this means you need to be confident that your pay system delivers equal pay and protects you against an equal pay claim. Men also have an entitlement to equal pay with women, but for ease of reading we look here at women compared to men.

A pay system

A pay system is the basis on which you reward workers for their individual contribution, skill and performance. Equal pay is not about performance, it’s about job demands. For more information, see the ACAS guide to pay systems.

Pay

Pay means all pay and benefits provided by the contract of employment between you and your employee. Pensions are treated as deferred pay.

Equal work

Men and women are doing equal work when their jobs:

• Are the same or broadly similar. People doing pretty much the same job should be paid equally, regardless of whether they are men or women.
• Have been rated as equivalent under a job evaluation scheme.  For more information, see the Acas guide to job evaluation schemes. 
• Are of equal value in terms of the demands their jobs place on them. Women doing very different jobs to men should be paid equally if the respective job demands pretty much even each other out.

How long will this take?

It should take you no more than half a day to check out a 20-person business with five different jobs, less if you know the jobs well and have easy access to payroll and personnel records. If you do know the jobs well you may be able to do this on your own, but if not, you may need to involve the person who does.

What do I have to do?

You will need to pull information about each of your employees out of your payroll and personnel systems and enter it onto a spreadsheet. You can complete the spreadsheet manually, but spreadsheet software (such as Microsoft Excel) is helpful. See our sample spreadsheet.

You will also have to decide whether your male and female employees are doing equal work. Similar jobs are easy to weigh up, but to decide whether different jobs are equal in value you will need to consider job demands such as the skills and knowledge the jobs require, and the responsibilities and sorts of problems the job holders have to sort out. It’s the jobs you are evaluating, not the job-holders.

You will then need to compare the pay of men and women doing equal work and explain the reasons for any differences in pay between them.

What kind of information do I need?

1. Each employee’s name or employee number; job title; start date; hours of work and whether they are male or female.
2. Each employee’s basic pay, total earnings and other work related benefits. Total earnings include basic pay plus any additions such as overtime, shift pay, bonuses, commission, or any other payments. Benefits include holidays, sick pay, company cars, pension contributions, and any other form of non-cash benefit.
3. If some employees work full-time and others part-time or flexibly, you will need to work out each employee's basic hourly rate.

How do I decide whether my employees are doing equal work?

1. Go through the employees on your spreadsheet and identify which of them are doing the same or broadly similar jobs. For example, all your salespeople may be doing the same jobs as each other, or all your delivery drivers or production workers. Job titles are a starting point but think carefully about what people actually do.
   
   Some of your people may do jobs that no one else does. For example, you may have only one chef in your restaurant, or only one office manager. But check that people with different job titles are not, in fact, doing pretty much the same job, for example: chef/cook, administrator/clerical assistant.
    
2. Go through the remaining employees to estimate the relative ‘size’ of their jobs, perhaps with the help of a colleague who also knows the jobs well. Focus on the demands of the job - not the abilities of the person doing it. Use your judgement to decide which jobs to assess – you don’t need to compare the job of a female cleaner with that of the male production manager, but you do need to compare the job of a female cleaner with that of a male delivery driver. See our equal value estimator tool.

How do I compare pay?

First you need to compare the pay of men and women doing the same or broadly similar jobs. Check which of the jobs where people are doing pretty much the same are done by both men and women and ask yourself:

Question	Response	Response
Are the basic hourly earnings the same for men and women doing this job?	yes	no
Are the total hourly earnings the same for men and women doing this job?	yes	no
Do men and women doing this job get the same type of benefits?	yes	no
Is the amount of the benefit the same for men and women in this job?	yes	no

---

Now do the same for the jobs where people are doing work which, though different, is of equal value.

If the answer to any of these questions is 'no', you need to find out what is causing those pay differences. You may find, for example, that people’s starting salaries are not always the same, or that part-time workers are paid less per hour than full-time workers, or that some employees are paid more in bonuses than others. In small businesses, common causes of differences in hourly basic pay and hourly total pay between men and women doing equal work are:

• Differences in starting pay or in pay increases since joining the firm
• Longer service in the job leading to either higher or lower pay
• Differences in overtime and shift pay, with some jobs attracting higher rates
• Some jobs being paid commission but others are not or some receiving bonuses but others not
• Some jobs receiving benefits, such as free meals on duty, taxis home for late workers, company cars or mobile phones.

What do I do if I find differences in the men’s and women’s rates of pay?

If you have found differences between the pay of men and women doing equal work, you need to be able to demonstrate that those differences are not related to the sex of the job holders and that you can justify the higher rate of pay. Otherwise you may get equal pay claims. Some pay differences, for example overtime and commission, may be justified by the requirements of the job, but you cannot rely on your perception or hunch that the higher pay is justified. You need evidence as to why you are paying men more than women, or vice versa.

For example if you are paying male van drivers a higher hourly rate than female machinists because of the ‘going’ rate locally for delivery drivers, you should be able to come up with current adverts in the local press showing the prevailing rates and with evidence that you are having difficulty recruiting van drivers.

If you have found pay differences between the pay of men and women doing equal work and you cannot justify them, then you should deal with the pay gaps immediately, but in the vast majority of small firms there are likely to be very few pay gaps that need addressing.

Anything else?

It is helpful to keep a record of the causes of your pay differences, whether you think they are justified and your reasons. It’s also useful to repeat the exercise every couple of years to ensure you are staying on track.

Further guidance on implementing Equal pay

• Checklists: equal pay in practice
• Equal pay audit toolkit (for larger organisations)

---

 Please send any feedback or enquiries to equalpayfeedback@equalityhumanrights.com.