Prior to the recent General Election which brought Labour into government, when it came to addressing pay gaps, women had stronger protection than any other group of people.  The Gender Pay Gap had long been recognised and it became law for organisations with a workforce in excess of 250 to submit data which showed the extent, if any, of their pay differential in terms of gender.

It is accepted that there is still more that needs to be done to achieve equality when it comes to closing the gender pay gap.  But it is happening.  However, there was no other legislation which required organisations to report on their pay bands and data when it came to any other group with protected characteristics.  That will soon no longer be the case as Labour has pledged to extend full equal pay rights to people with disabilities and ethnic minority workers as part of its new Race Equalities Act.  This is tremendous news!

Impacts Millions of Workers

Addressing these pay gaps will be a big step towards fostering diverse, inclusive and equitable workplaces.  These issues impact millions of workers within the UK and employers have the power to bring about positive change.

However, taking this big step towards equity brings a challenge for employers. At Inclusive Companies we have urged organisations to be collecting this data for some time and when we compile the Top 50 Inclusive Companies List (IT50) we are seeing a small increase in submissions with such data.   But now it is going to be a legal requirement.  So where do you start?

Three Steps

Address this as a three-step process:

1. Identify
2. Measure
3. Close

These three steps can be broken down by specific actions to help you gain the detail you need to develop your action plan and address any pay gap situation.

1. How to Identify Pay Gaps
2. Pay Audit.  You’ll need to understand exactly the state of pay within your organisation.  A wide-ranging pay audit needs to include analysis of salary data across all demographics, to include gender, ethnicity and disability
3. Demographic Data.  So, you’ll also need to have clear demographic data for everyone within your organisation.  Even though there is a legal requirement to submit data, you do need to be sensitive in how you gather evidence of ethnicity and disability status.  And do remember, your findings must always be kept confidential
4. Like-for-Like.  The final part of this first step in identifying pay gaps is to compare the salaries of employees in like-for-like roles.  This means similar work for those with similar responsibilities, experience and qualifications.  By looking at all three aspects when comparing the similar work, you will gain the most accurate and fair results

• How to Measure Pay Gaps
• Calculate the actual Pay Gaps.  It is important to calculate both mean pay gap (difference in average salaries) and the median pay gap (difference in middle value of salaries).  Using only the overall mean can give a distorted figure should there be a few salaries which are considerably different to most within a certain band.
• Reporting Tools.  To ensure that you have reliable data, use the tools and frameworks which are available and created specifically for this purpose.  The Government Equalities Office (GEO) has a gender pay gap reporting service which allows you both to report and analyse your findings.  Given the fact that submitting data for ethnicity groups and disabled people will become law, we can presume that the government will offer similar specific tools. However, you can also contact us www.inclusivecompanies.co.uk and we will be able to help you to use suitable tools
• Analyse.  Having got the data, you will then need to analyse pay bands within your organisation to identify patterns, be they underrepresentation or pay disparity at specific levels

• How to Close Pay Gaps
• Action Plan.  Using all your findings, construct a clear plan – to include objectives to address the identified pay gaps.  It is hugely important to ensure that your objectives are measurable.  As this is something which is now part of your organisation’s culture and ethos, your objectives should cover short, medium and long-term strategies.  As with the Reporting Tools, look to see what already exists which can help you: the Equality and Human Rights Commission has ‘Guidance on Pay Gaps’ which may help you develop strategies within your plan.
•  Inclusive Recruitment Practices.  Look carefully at your recruitment practices to ensure that they are designed to attract a diverse range of applicants.  For example, you may choose to promote positions by using diverse job boards, implementing blind recruitment processes and/or having diverse interview panels.  Once again, Inclusive Companies can help you with such processes
• Transparency.  Promoting transparency regarding pay and promotion/job opportunities helps foster a culture of equity within your organisation.  Being open and clear in your communication builds trust and can also help address any potential disparities.
• Development Opportunities. By offering targeted development opportunities for people in under-represented groups you are promoting and supporting career progression.  And as gaps in skills and experience are addressed, pay gaps will decrease
• Frequent Monitoring and Reporting.  Having stressed that strategies and objectives need to be measurable, it is vital that you regularly monitor and report on the progress being made in your Action Plan.  The Pay Audit you undertook at the beginning of this process needs to be annual and is a good place to start

Everybody Wins It may seem a lot to do but take comfort in the fact that many organisations are already doing it and there are also a lot of bodies which can provide help.  It is going to become a legal requirement but, more importantly, employers should undertake this to ensure an equitable and inclusive workplace.  At the end of the day, fair pay for employees will enhance your organisation’s reputation and productivity.