Why equal pay matters

Employers in all sectors benefit by providing equal pay. It is not just a legal requirement under the Equality Act 2010 (the Act), but also an important step towards a fairer Britain.

Paying women less than men has far-reaching implications for society by contributing to the gender pay gap, women’s lower pension contributions and their higher incidence of relative poverty in later life.

Pay is also one of the key factors affecting motivation and relationships at work, ultimately contributing to your commercial success, so it’s important to reward all employees fairly.

The business benefits

Pay systems that are transparent and reward the entire workforce fairly:

• send a positive message about your organisation’s values
• increase efficiency and productivity by attracting the best employees and reducing staff absence and turnover
• form a key part of your organisation's corporate social responsibility -  increasingly important for many stakeholders

Providing equal pay for all employees will also reduce the risks of facing an equal pay claim and help avoid:

• Expensive legal fees which could cost thousands of pounds
• Lost productivity as management gather evidence and deal with tribunal hearings
• Damaged employee relations and low staff morale
• Cost of tribunal decisions - in addition to their own legal fees, employers who lose have to pay the claimant a financial award, which could include up to six years’ back pay and, in some circumstances, the claimant’s legal fees
• Loss of reputation with customers, shareholders and potential employees
• Possible further audits ordered by a tribunal

Apart from helping you to meet your legal obligations on equal pay, carrying out an equal pay audit or review can have other beneficial effects. For instance, it could reveal other equality issues in your organisation, such as under-representation or job segregation of people with certain protected characteristics.

If so, you may want to examine other employment practices to ensure they are free from discrimination of all types. These might include recruitment processes, approaches to training and development and succession planning.