Long reads

Why is unequal pay still a problem?

23 Jan 2020 By Rob Gray

Many firms still reward people differently for the same job – and they might not even know it

This year marks the 50th anniversary of the Equal Pay Act 1970, which made it illegal for employers to differentiate between men and women on matters of pay and conditions of employment. And it’s now a decade since the introduction of the Equality Act 2010, which largely superseded it. 

Plenty of time, then, to have finally laid to rest the issue of equal pay. But this isn’t the case for every employer. The BBC, for example, has come under fire for equal pay failings following the high-profile resignation of China editor Carrie Gracie, and Newswatch presenter Samira Ahmed’s employment tribunal victory – with reports that other female BBC employees are also taking action 
against the broadcaster. 

Elsewhere, last year Glasgow City Council began paying out £548m in compensation to around 16,000 workers, the vast majority of them women in roles such as catering, cleaning and caring, who had been earning up to £3 an hour less than colleagues on the same pay grade with jobs in male-dominated roles such as refuse collection. 

To finance the settlement, the council struck complicated property-backed loan deals involving the remortgaging of many of the city’s prime property assets, including museums, sports venues, offices, and conference and events facilities. As a result, it will face hefty loan repayments for decades. 

Clearly, Glasgow is an extreme case of failure to comply with equality legislation. Yet many companies still face difficulties getting to grips with equal pay. Thanks to gender pay gap reporting, mandatory since 2017 for firms with more than 250 employees, many in HR have discovered they have a problem not only with gender pay gaps, but unequal pay too.

A crucial distinction many in HR and reward circles have taken great pains to make since gender pay gap reporting first entered the HR lexicon, is the difference between gender pay gaps and unequal pay. Despite continuing confusion, a gender pay gap is not synonymous with unequal pay. The latter is only one of a number of potential factors contributing to the gender pay gap, with others including unequal shares of caring work in the home done by men and women, resulting in women doing more part-time work; the under-valuing of the types of work women do; a lack of women entering certain well-paid careers such as science and engineering; and a failure to promote women. 

But, illegal since 1970, pay discrimination is the most controversial factor an organisation could uncover as at least partially driving their gender pay gap – and one requiring urgent and serious attention from those employers that, up until recently, may not have realised they had a problem.

In fact, while it might have been expected that large organisations would have realised several years ago if they had an issue with unequal pay, there could still be some making such disquieting revelations. In February 2019, analysis by the Guardian found that more than 30 employers had filed inaccurate data, with several companies publishing mathematically impossible gender pay data in the first year of reporting despite the second round looming, and with a percentage also filing mathematically impossible figures for the second year. And so despite 4 April 2020 (30 March for public sector organisations) marking the third reporting deadline for eligible employers, some may only just be getting to grips with their data. 

And equal pay isn’t just about gender. There are some deep-seated concerns relating to ethnicity, and some troubling figures. According to ONS data released in July 2019, employees from the Bangladeshi ethnic group on average earned 20.2 per cent less than white British employees. 

The Fawcett Society is among the bodies pushing for ethnicity pay reporting. The government closed its consultation on this in January 2019 and the outcome remains unclear, although the likelihood is it will be introduced at some point over the next couple of years. 

The Fawcett Society is also calling for women to have a legally enforceable ‘right to know’ what male colleagues earn. Eighty-six per cent of women would be in favour of this, according to the society’s accompanying report Why Women Need a Right to Know, which also found that three out of every five working women are either in the dark about how much male counterparts earn, or are aware the men earn more. 

On top of gender and ethnicity pay gap reporting, 2020 is the first year quoted companies with more than 250 employees are obliged to deliver CEO pay ratio reports. Which means appetite for pay transparency is only growing among employees, says CIPD senior performance and reward adviser Charles Cotton, who also points to the small handful of employers taking the radical step of publishing exactly what everyone’s paid, either internally or even publicly. Although “those tend to be relatively new, smallish IT set-ups… there is still only one direction of travel when it comes to pay transparency”, he says.

So how can HR teams best tackle the urgent matter of ensuring they pay people doing the same role equally?

Most important will be an equal pay audit. If you’re part of a larger organisation obliged to conduct gender pay gap reporting, you should already be doing this as part of the process and have accurate data at your fingertips. But as doubts around the accuracy of the first two rounds of gender pay gap data show, some HR departments might need to call in outside help.

“The first step is making sure you have what you need,” says Cotton. “Perhaps you might need to second people in from other departments to help you, or possibly people from outside the organisation in terms of capturing, analysing and interpreting the information.”

The problem for many, explains Cotton, is both maintaining accurate data on what people are paid, and sticking consistently to a sound, official rationale when making pay decisions. “The challenge for many larger organisations is they have grown over time, taking over other companies, and there may not necessarily be any logic behind why they are paying people as they are now,” he says.

“What is important is organisations start getting their house in order before they start making pay transparent, because it’s a legal right and employers that find a gap that’s unjustified are required to fix it.” 

The communication piece is important too. There must be clarity when explaining to line managers and their team members what is being rewarded and how, explains Cotton, and organisations should make sure the people making reward decisions are “suitably equipped” to do so. “As well as comparing the figures, it’s an opportunity to check the understanding of line managers and employees about what’s being rewarded, why and how,” he says.

But HR teams must avoid panicking and jumping to conclusions if disparities emerge, advises Rank Group HR director David Balls. When conducting pay audits it’s vital to be aware of the “nuances” they throw up and not immediately assume discrimination, he says. The key is to have data good enough to show if there’s a genuine reason for a disparity. 

“You’ve got to be careful and pull yourself back from rushing to a judgement,” he says. “Are there genuine reasons for this being in the data? Someone might have more experience, someone might have more relevant experience, someone might have been in the organisation longer. A lot of gender pay gaps are not driven by inequality.”  

Rebekah Wallis, UK director for people and corporate responsibility at Ricoh, agrees the ultimate success of an effective equal pay audit lies in both accurate data and careful analysis. She says regardless of legislation, paying people equally for equal work is a “moral duty” for all employers. Managers must have the authority and take responsibility for addressing any inequalities and, once any are uncovered, it’s essential action is taken and plans are put in place.

But even with the best intentions, there are still problems to surmount. “While essential, equal pay audits, and the subsequent addressing of any imbalances, do not come without challenges,” says Wallis. “These can range from identifying which roles are similar – difficult for organisations where there is no existing objective evaluation system in place – to the sheer cost of addressing any inequalities. 

“A particular challenge is where an individual, or individuals, of one gender – and this works both ways – are effectively overpaid and their peers/comparators are actually paid at the correct market rate. Increasing everyone to then be overpaid is not necessarily the right solution. It could be both costly and have a wider impact on other roles in the organisation. Two wrongs do not make a right. Solutions to challenges such as these are not always easy.”

Tea Colaianni, founder and chair of Women in Hospitality, Travel & Leisure and former HR director, agrees that if equal pay audits are to achieve meaningful change, they require the support of all managers who have the responsibility and authority to put right any unjustified pay and benefits inequalities identified. “Gender pay gap reporting and recent court cases suggest that many organisations are still a long way from eliminating the gender pay gap and achieving equal pay. When ethnicity pay gap reporting is introduced, similar findings are likely to emerge,” she adds.

With the next full UK census due in March 2021, Cotton thinks it possible the government will wait until the ethnic classifications are agreed for ethnicity pay gap reporting, so as to ensure consistency. 

But this will soon come round. And given other moves to shine the spotlight on fair pay, more pay transparency is undoubtedly coming. Meaning employers must ensure they are shipshape, and that their reward practices are equitable and – most importantly – legal.  


Your unequal pay experiences

What happened when two female employees insisted they had a ‘right to know’ what their male counterparts were paid?

Kate:“Eighteen months ago, when I was 21, I worked for an IT company and I was one of the first people on their new projects team. I helped train new members of staff as they came in. After a few months, when some male colleagues I’d been training received their first pay cheques, they made a comment about how much tax they were paying – and it was more than me. That’s how I found out.

“I raised this with my manager, who said it had nothing to do with her – I’d have to go higher up, which I did. Basically I was told there was nothing they could do. I’d agreed to the wage when I signed my contract and that was that. 

“I was told that because of the type of role I was in and the responsibilities I had, I should take comfort in the knowledge I would be in a better position to work my way up than the people currently on a higher wage than me. But if I was in that position, surely I should already have been on a higher wage?

“One person was earning a third more and another double my salary, and what they were doing was basic compared to my role. I spoke to some co-workers in different departments because I’d heard other people had similar issues. They were essentially threatened. They were told we couldn’t discuss salary or we’d be in breach of contract. That made me feel I was unable to take it further.” 

Kate left the organisation and today serves on the advisory panel of a charity that champions gender equality.


Sophia: “I was working at a local authority when I found out during a discussion with a male colleague, who had the same job title as me, that he was earning roughly £3,000 a year more than me, even though my role was more complicated and he was a recent graduate, while I had two years’ experience. 

“My line manager was unwilling to increase my pay and refused to say what the reason was. I did feel at the time it was clear sexism. To anyone who finds themselves in a similar situation, I’d say don’t be afraid of bringing up relevant legislation.” 

Sophia resigned shortly after her line manager refused to provide a reason for paying her unequally. 

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