Equal Pay Isn't Just About Gender

Hi,

is your October as busy as mine? I ran a Pay Transparency round table at UNLEASH last week and it was clear that CHRO's all struggle with the same questions. That's why I recommend you participate in

• this pay transparency study that gathers data on the key success factors and challenges organizations face when implementing transparent pay structures, organized by the Fachhochschule Dortmund and Philipp Schuch .
• And I will attend SuccessConnect 2024 in Lisbon on October 28-30.

My last newsletter led to a conversation about the aspects of Equal Pay besides gender. And I realize that with the attention on the EU's 5% gender pay gap, we could lose sight of the fact that gender isn't the only characteristic that contributes to pay discrimination. So this week, I'll make up for that omission!

I often talk about the EU Pay Transparency Directive and its 5% gender pay gap threshold. And you might assume that the directive is solely focused on gender equality. But "equal pay for work of equal value" is more complex than that. You are not done when you eliminate the gender pay gap.

The directive - and all other European laws on which it stands - is not just about gender; it aims to eliminate all forms of unjustified pay disparities, to ensure that employees, regardless of their background or personal characteristics, receive fair pay for their work. The gender pay gap is just the most pronounced, and the number you have to publicly report on.

Let’s break down why this matters and explore some other forms of pay discrimination that employers need to be mindful of.

Understanding Pay Discrimination: More Than Gender

The principle of equal pay for equal work applies to everyone. And when you run your equal pay audit, you will undoubtedly discover pay discrepancies that can't be explained by gender. In my book I share a full list of what to look for, but here are 5 of the most common ones:

1. Race and Ethnicity Imagine a situation where two employees, one from a minority ethnic background and one from the majority, have identical roles, responsibilities, and performance levels. If the minority employee is paid less solely due to their ethnicity, this is clear pay discrimination.
2. Disability Employees with disabilities must receive the same pay as their colleagues doing the same work. They should also not be passed over for promotions and bonus opportunities. For example, when employees with disabilities are disproportionately concentrated in lower-paying roles, despite having qualifications for more advanced positions, that's a violation of the law.
3. Age Younger employees might find themselves being paid less than older colleagues, or vice versa, without any reasonable justification based on skills, experience, or responsibilities. Pay structures based solely on age rather than job-related factors are discriminatory.
4. Sexual Orientation or Gender Identity In some cases, LGBTQ+ individuals may experience pay disparities compared to their cisgender or heterosexual colleagues. These characteristics can't influence pay in any way.
5. Parental and Family Status Parents, particularly women returning from maternity leave or those with caregiving responsibilities, can sometimes be offered lower wages or fewer advancement opportunities. This is illegal under both the EU directive and broader labor laws. Family status should not affect pay for work of equal value.

Why This Matters

When you solely focus on gender while implementing the Pay Transparency Directive, you are not doing enough. Other European and national laws prohibit pay discrimination based on these protected characteristics. Organizations need to conduct thorough pay audits that go beyond gender and consider all potential grounds for discrimination. If you don't, you might unwillingly or unknowingly violate the law:

• Legal Compliance: Discrimination of any kind, whether based on race, disability, or age, is against the law. The EU directive is designed to bring transparency to pay practices, and if pay disparities are found on any grounds, companies can face serious legal consequences.
• Workforce Morale: Employees who believe they are being underpaid or discriminated against are likely to feel undervalued, leading to lower morale, engagement, and productivity. On the other hand, fair pay practices can significantly boost retention and job satisfaction.
• Reputation and Talent Acquisition: Organizations that eliminate all forms of pay discrimination tend to attract top talent from diverse backgrounds. No one wants to work for an organization that is known for underpaying employees based on unfair biases.

Practical Steps to Avoid Discrimination

What can you do to ensure you are a fair pay employer? First, start collecting the data. And also pay special attention to what you don't know. As example, in some countries, an employer isn't allowed to register the ethnicity of an employee. But just because you can't measure it, that does not mean that you don't have pay discrimination. Your official reports just don't show it. Also keep in mind that once the Pay Transparency Directive goes into effect, the burden of proof switches from the employee (currently) to the employer. So here's what you can do:

• Training and Awareness: Educate managers and HR professionals on the broad spectrum of pay discrimination. Often, pay disparities happen unconsciously, so it’s essential to raise awareness across the organization.
• Transparent Job Evaluation Systems: Use standardized criteria for evaluating roles and responsibilities. Ensure that employees with similar job functions and qualifications are paid fairly, regardless of their personal background or any other characteristics.
• Comprehensive Pay Audits: Regularly audit pay across all categories, not just gender. Look for patterns in pay based on race, age, disability, and other characteristics, and address any unjustified differences. Solutions that include multivariate regression analysis will show exactly what characteristics influence pay.

Building a Fair Workplace

The EU Pay Transparency Directive is a step in the right direction, but it’s important not to reduce its scope to gender pay gaps alone. Pay discrimination can occur for a wide range of reasons, all of which are unacceptable under (existing) EU law. By taking proactive measures and implementing comprehensive, fair pay practices, you can ensure your organization complies with the law while fostering an inclusive, equitable workplace for all.

If your organization is looking for guidance on how to implement these steps or needs help conducting pay audits, stay tuned to this blog for more practical advice on achieving pay transparency. Or reach out for a conversation, keynote or workshop.

Do you have a question? Leave a comment or, if you want to remain anonymous, send me a DM! I'll answer them in an upcoming edition.

• Send me your Pay Transparency question. I'll keep it confidential!
• Get the book: Equal Pay for Equal Work . It's a practical guide to successfully implement a pay transparency program. Now also available in Dutch: Gelijk Loon? Gelijk Werk!
• Subscribe to the Equal Pay newsletter
• DM me for keynotes or in-house workshops

via hrtechradar.com