Equal pay: job grading

Many organisations group jobs into grades or bands, making it easier to apply the same pay and other contractual terms and conditions of employment to them. This provides a consistent framework for managing a pay system and will reduce the risk of an equal pay issue, known as a job grading structure.

Job evaluation is the route to a fair grading structure. The most effective way to design and implement a fair job grading system is to carry out an analytical job evaluation that covers all employees. You can use our job evaluation guidance to help you do this.

A job grading structure usually consists of:

• a series of grades with pay ranges attached to each one;
• or a single pay spine divided into grades at incremental points

Used properly, a job grading structure should ensure that jobs of equal value are paid equally.

In order to develop a risk free grading system it is useful to:

• look at the roles in your organisation as they stand and where those roles would fit into a new grading structure
• avoid having too many grade structures or grades, as these can increase the risk of equal pay issues. So, too, can any overlaps between grades.
• Have objective and transparent reasons for progression through grades
• Avoid managerial discretion in relation to grading, or where this is necessary centrally monitor the decisions being made and train manager on how to apply common standards and avoid bias.

Key questions to consider if designing or updating your job grading structure

• Are there any differences in the average pay of men and women in each pay grade or band? Can you justify them?
• What points in the pay range are employees placed on when they are recruited or promoted?
• What points in the pay range are employees placed on when they are assimilated into a pay structure after a restructuring or regrading exercise?
• At what rate do employees progress through the pay range?
• Do male and female employees have equal access to and receipt of all additional payments (for example bonus, overtime) and benefits (for example medical insurance)?
• What is the relative impact of performance pay on male and female employees?

In each case, ask yourself if there are there any gender differences.

Pay progression is when an employee moves up a pay band or scale. This can happen:

• on a specific date, such as the start of the financial year (known as incremental progression)
• when they achieve an agreed performance measure
• when they reach a particular level of competence, such as completing a training programme

If men in your organisation are progressing to higher pay faster than women, it may indicate unequal pay and you may need to take action, for example by:

• guaranteeing that employees will reach the maximum pay point in their pay band within a reasonable timeframe
• setting time limits within which employees will reach each pay point
• setting target pay points for all staff to reach within a specific time
• setting competency and experience criteria for workers to reach each pay point
• giving those at the bottom of the pay band a higher percentage pay increase than those at the top
• having shorter pay scales, which accurately reflect the time needed to become fully competent at a job
• giving a minimum cash increase to all workers, for example 4% or £500, whichever is the greater

There is no one best method of progression through pay grades. You must decide which is most appropriate for the size of your organisation and the composition of your workforce.