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What is Pay Parity?
Pay parity is the principle of paying a fair and equal salary to everyone doing the same job under similar conditions. This means that people are paid equally for work that is of equal value to the organisation, regardless of their gender, race, sexuality, or nationality.
Many employers will define how they interpret and implement pay parity in company-wide diversity, equality and inclusion policies and initiatives.
The UK government has legislated to ensure that pay parity is a protected right. However, pay parity is more than just a legal commitment for progressive companies. It is also about being inclusive, attracting a more diverse range of candidates, and encouraging loyalty and commitment in the organisation.
Pay Parity and UK Law
The Equality Act 2010 protects people from workplace and wider society discrimination. It includes the right to equal pay for a role of equal value to an organisation. This right applies to all employees and workers, including agency workers, those on part-time or temporary contracts, and self-employed people and apprentices.
The 2010 legislation replaces previous anti-discrimination laws, such as the Equal Pay Act 1970, the Sex Discrimination Act 1975, and the equality provisions in the Pensions Act 1995.
Difference Between Parity and Equity
The terms pay parity and pay equity are often used interchangeably. Although they both refer to having a compensation strategy that does not discriminate, there is a subtle difference in what they refer to:
Pay parity focuses on equal pay across the workforce. In reality, this means working towards eliminating the pay gap between men and women (known as gender pay parity) or between people in minority groups.
Pay equality focuses on equal pay between individuals doing a similar job and with similar backgrounds, qualifications and experience.
How to Achieve Pay Parity
Achieving pay parity within an organisation is not quick or easy, but investing in the process is essential for companies from a moral and legal perspective.
There are three steps to achieving pay parity:
- Understand the current position: what is the current wage gap?
- Address any gaps discovered and review the learnings.
- Communicate the current position, the aim, and the plan to the workforce.
Understand the Current Position
Companies must audit the organisation’s arrangements to understand the position regarding pay disparities. During this pay audit, salaries need to be cross-checked against demographics such as gender, ethnicity, disabilities, and sexual orientation, as well as the experience, skills, and responsibilities of each role. It is also essential to collate information on the demographics of those making the hiring decisions, as this can identify where some groups are under-represented or where inclusion is not being prioritised.
In addition to a data audit, information needs to be gathered from employees on their experiences working in the company and their feelings about their opportunities for career development and pay progression. Individuals who feel excluded from advancement due to company culture or experiencing unconscious bias may not have been able to voice these concerns. Creating forums to discuss pay parity can help open up these discussions. Allowing people to contribute their opinions anonymously is also essential.
In addition to all the internal research, benchmarking data from external competitor organisations can help identify pay parity issues by providing comparisons with other companies.
Address the Gaps and Their Causes
Once the work has been done to identify pay gaps and understand what may have caused them, the next step is to address specific gaps and the underlying causes as thoroughly as possible. While focussing on individual cases can be a quick win that is easy to celebrate, this can be seen as tokenistic and often doesn’t address the root causes. To be properly committed to implementing pay parity, companies must have a systemic approach that puts equality at the centre of their hiring process, compensation framework, and training and development programmes.
Examples of this include:
- a clear and transparent compensation framework
- equal access to training and development opportunities, alongside a programme for career progression
- inclusive hiring practices, including the writing of job descriptions and interview questions to avoid bias, training for those involved in short-listing candidates and interviewing them
- improving childcare and flexible work options to help retain those who may experience a pay inequality due to changes in their personal circumstances such as becoming parents or caring for other relatives
It is also essential to use metrics to monitor what is happening within the organisation regarding hiring, wages and inclusive practices. With this information, companies can regularly review and update the different policies and compensation practices they are using to achieve pay parity, making it more likely that they will succeed with this aim.
Communicate the Position and the Plan
All the work to identify the current position and implement plans to remove the gaps must be backed up with a strong communication strategy, including easy access to the company’s compensation framework and pay policies and the ability to access professional support if an issue is identified.
To be truly inclusive, companies need to ensure all their employees understand how pay parity contributes to the overall culture and success of the organisation. As well as communicating to the whole company the current position in terms of pay parity and the plans to address this, senior leaders can model inclusivity by attending courses themselves, ensuring that fair hiring practices are implemented throughout the company and creating a culture where those who may be discriminated against feel that they can bring their concerns to leadership without fear of reprisal.
