An equal pay audit evaluates an organisation’s pay data to determine if employees are being paid fairly, or if some are being rewarded differently to others. This allows organisations to easily identify and keep track of pay equality in their workplace. An equal pay audit helps employers spot discrepancies and find solutions to treat everyone fairly, taking into account a person’s race, gender and disability. Discover everything you need to know about an equal pay audit and how Paydata can help your business.
Many people and businesses can wonder what is a gender pay gap? In essence, a gender pay gap in the UK is the percentage difference between average hourly earnings for men and women. Over the years, reports and statistics have shown that men have received considerably more than women for the same level of job. The introduction of gender pay gap reporting aimed to highlight this issue and encourage employee to work to close the gap.
As well as the gender pay gap in the UK, many people wonder what is a race pay gap? Similar to the gender pay gap, the race pay gap shows the difference in the average pay between all Black, Asian and minority ethnic staff in the workplace and all White staff.
With both of these pay gaps, it is essential for organisations to use their data to understand pay disparities between gender and ethnic groups. This can help determine discrepancies and make vital adjustments to achieve equal pay.
Equal pay is important for multiple reasons, but the most pertinent reason is to ensure fair and legal treatment of all employees by eliminating wage discrimination. This promotes diversity and inclusion in the workplace and complies with the law, contributing to a fairer society. These essential factors send a positive message about your organisation’s values which, in turn, can increase employee engagement, help attract the best employees and reduces staff absence and turnover.
Using an equal pay audit to strive for fairness in your organisation can help you address the injustices people face and reduce opportunity gaps. Having conducted and acted on the outcomes of an equal pay audit, you will help avoid legal challenges.
The requirement for employers to publish their Gender Pay Gap figures signaled a wider movement towards examining pay equality in the workplace. Whilst employers need to be able to explain any gender pay gap in the UK - and a gender pay audit can help with this - the spotlight is quickly moving towards equal pay as a whole.
Employees can make an equal pay claim on grounds outside of gender including race, disability and age. Paydata’s equal pay audit helps to shed light on this sensitive subject, providing transparency that works towards making a level playing field for all employees, whilst also improving staff satisfaction and trust in management.
The Equality and Human Rights Commission (EHRC) is the leading body responsible for equal pay. The commission works to:
Employers have been prohibited from treating men and women differently in terms of pay and conditions since the Equal Pay Act in 1970 (mostly superseded by the Equality Act 2010). Indeed, Paydata first started working in this area in 2003, supporting employers wishing to identify if there is a pay differential between demographics in the business and more importantly, what is causing it.
The most accurate and thorough way to determine whether your pay system discriminates in practice is to conduct an equal pay audit.
The EHRC has set out five steps in an equal pay audit (or gender) process:
Our approach to equal pay audits in the UK follows this best practice guidance. With years of experience in the field, the Paydata team is best placed to offer professional advice, ensuring that your business is seen to be leading the way.
Losing key and valuable members of staff because of an issue relating to equal pay can be hugely damaging to an organisation's growth. Not only does this make for a commercial issue, but it can potentially manifest into poor PR for the business which may not only dissuade potential candidates wanting to join your team, but also potential suppliers and customers from working with you. With this in mind, equal pay audits should be conducted periodically and taken seriously.
There are a variety of equal pay measures that are essential to understand what they mean and their differences, so you know what needs to be put in place.
This is where people are doing the same or similar jobs. For example, in finance teams, “like work” might include all accounting and auditing jobs at a given level. This means looking at the responsibilities and duties of the employee rather than the job title itself.
An equal pay measure for when a job evaluation scheme operates, and all those jobs graded the same are compared together. Positions can be given a corresponding job level that can be used to rate positions across various departments, industries and job families.
This is where there is either no job evaluation scheme in place or multiple schemes. With multiple schemes, the first step is to establish grades that have equal demands, so jobs can be compared across schemes. Where no scheme exists, the assessment method depends on the circumstances involved. Usually, most customers need help organising and processing their data. Paydata can produce equal pay reports to highlight potential problems and examine data in further detail to show areas that require attention. We can also provide pay modelling services to help you develop and implement an equal pay action plan.
Having a robust job evaluation scheme in place will make your equal pay audit easier. If you don’t have job evaluation in place (or it needs updating), Paydata can help you get everything in place and ready to conduct an audit on your behalf.
It is also worth considering investigating your equal pay issues under legal privilege. This approach means that you use your solicitor to instruct a third party (such as Paydata) to undertake work on your behalf. This can then be reported back via a solicitor, who can advise you on how to interpret the results. The benefit of this approach is that advice given under legal privilege is not admissible in a court or tribunal. Some employers conduct their own audits but if they discover things that they fail to address, it can count against them should they face an equal pay claim.
Our equal pay audits enable organisations to measure the overall pay differences between groups of employees and identify where pay equality issues lie. Broken down by like work, comparing those rated as equivalent and of equal value, as well as by region and business unit, organisations will be able to determine what is driving up the pay differences and work to rectify any issues.
Reward Consultant
Joe is a reward specialist who is passionate about working with customers to ensure they have effective reward management practices in place to help a...
© Paydata Ltd 2025 All rights reserved.
Registered in England no: 3632206
VAT no: 728 0808 28
Paydata Ltd, 24 Commerce Road, Lynch Wood, Peterborough, Cambridgeshire, PE2 6LR
