Equal pay audit step 1: deciding the scope

Deciding the scope of the equal pay audit and identifying the information required involves some crucial decisions about the entire audit.

This is particularly important if this is your first review. The key areas to consider are discussed below.

A full audit or a staged approach

• A full equal pay audit would include all employees in your organisation. However, for practical reasons it may be difficult to carry this out for the whole workforce at the first attempt.
• You may decide to take a staged approach, perhaps beginning with a particular department where you think there might be a risk of unequal pay, and develop expertise in the audit process before extending the scope to cover all employees.
• If you do this, consider carrying out a risk assessment to determine which parts of your organisation to audit first. 
• Be aware of the limitations of a partial audit of this type. For example, it won’t allow you to compare whether roles in departments not under audit are of equal value to roles in departments under audit. The results shouldn’t be used to make overall conclusions about the organisation as a whole.

If you do decide to carry out the audit in stages, be aware that it may increase the risk of an equal pay claim being made until the whole process is complete.

Who should be involved

You may decide to perform an audit internally, or to enlist external help. If performing it internally, there are benefits in including a range of people to help improve objectivity of the analysis. Useful members of the audit team could include:

• HR team member who can operate staff databases, with knowledge of relevant pay and grading arrangements and how these have changed over time
• Someone with expertise on the topic of equality and diversity and with background information about patterns of gender inequality in your sector
• Someone from finance who can use your payroll system to generate the information you need.

Think about what resources you need and how far you will use internal and external expertise.

Involving trade unions or other employee representatives

Employees and their representatives may be able to contribute valuable information about how the existing pay system operates and the likely effect of changes.

This can reduce the risk of any disagreement at a later stage, particularly if the outcome of the audit is likely to affect existing pay differentials. Employees will have more opportunity to understand the reasons for any changes. This will help to ensure that pay systems are transparent and easy to understand.

Outside expertise

You might find it helpful to involve an external body such as Acas. As employment relations experts, they can offer practical, independent and impartial help to bring pay systems up to date.

Information needed and the tools available

Before deciding on the scope of your audit, you’ll need to establish what data you require, how much of it you already have and how accurate and accessible it is.

You will need to collect and compare information about each employee included in the audit, including:

• all the various elements of their pay
• their gender, job, grade or pay band, what hours they work and when they work these, their length of service.

The information required will vary depending upon the type of organisation and on your particular pay and grading system.

For further details of the data you will need, download this list of the data required for an equal pay audit.

It’s important that the data used for the audit is up to date and accurate, as even minor discrepancies can affect the accuracy of the results.

You also need to consider the data protection issues involved. Be aware of your legal obligations when processing personal data, and consider the approach you intend to adopt in relation to the disclosure of the results of the audit.

Bringing the information together for analysis

If you have a combined human resource and payroll system, the information you need should be there. However, in many organisations the information required needs to be drawn from more than one source.

Plan how you will bring the information together and how you will analyse it. More guidance on the type of analysis required is included in Step 3 – Analysing pay

Setting expectations and dealing with outcomes

It’s important to recognise that an equal pay audit is not simply a data collection exercise. It includes a commitment to action if unjustified pay inequalities between women and men are found.

Many employers genuinely believe that they are providing equal pay and that an audit will reveal no inequalities. So, early in the process you need to ensure senior management has realistic expectations about possible outcomes. Make them aware that the audit needs to be built on a commitment to an equal pay action plan and possible changes in pay.

Before you start the audit, here are a few communications tips:

• Think about how you communicate your intentions to employees. For example, explain that the audit may result in changes to pay.
• It’s important to have clear backing from senior leadership so employees know the audit has teeth. Some senior managers may require further information before offering their support and sponsorship, in which case it can be useful to share headline data on equal pay before commencing a detailed audit.
• It’s important to be clear and transparent about the methodology you’re using to arrive at decisions following the audit. This can be achieved without sharing personal information about particular individuals’ pay.

Expect some pay gaps

It’s rare to emerge from a properly conducted pay audit without some gender pay differences or aspects of pay policy requiring change.

That doesn’t mean that pay discrimination has occurred, or if it has that it has been deliberate. Pay differences between women and men may have been caused by the impact of historical factors, such as length of service. Some differences may be justified.

Take one step at a time in the analysis and explanation of pay differences and remain objective.