Women and men paid differently for equal or comparable work (unequal pay) How does this drive gender pay gaps?
Unequal pay is not the same as a gender pay gap, although instances of unequal pay can accumulate and contribute to your organisation’s gender pay gap. Equal pay is where employees are paid the same for performing the same role or different work of equal or comparable value, regardless of sex.
Equal pay is not just about an equal salary—it also considers total remuneration (discretionary pay, allowances, performance payments, merit payments, bonus payments, and superannuation). Failure to pay women and men equally for ‘work of equal or comparable value’ is illegal and may result in your organisation and individuals being exposed to a range of legal claims. Despite the legal requirement, many organisations find that there are differences in what women and men are paid for what seems to be equal work. This could be because of a hiring manager recruiting people at different salaries when they join an organisation based on what they were paid elsewhere, because some people have greater skills or tenure in a role and attract higher pay, or because of bias
Follow the steps to find out what’s driving your gender pay gap.
1. Choose a snapshot date
Choose a specific ‘snapshot date’ for which you will pull your workforce data. Many workplaces have highs and lows throughout the year, so your snapshot date should be a date which most represents your typical workforce for that year. Ideally, for consistency, your snapshot date is the same one as the one you use if you report to WGEA.
2. Collect the data
Collect employee demographic data, information on the jobs they do, and what they are paid. This information is generally available from your payroll or Human Resources Information System (HRIS). For private sector employers with 100 or more employees, much of this information is submitted annually to WGEA in the Workforce Profile and Workforce Management Statistics spreadsheets. You can use the data in these spreadsheets for your gender pay gap analysis.
Table 1 outlines the data you need for these core analysis of key drivers of your gender pay gap.
Table 1 | Data required for a gender pay gap analysis Submitted to WGEA in the Workplace Profile:
• Gender
• Base salary
• Total remuneration (including base salary, performance payments, allowances, bonuses, cashed-out annual or long service leave payments, share allocations, superannuation, and non-monetary benefits)
• Occupational category
• Manager/non-manager categories
• Graduate/apprentice
• Employment status, i.e., full-time, part-time, casual
• Employment type, i.e., permanent, contract, casual
• Employee year of birth (to calculate age)
• Promotion outcomes
• Internal and external appointments
• Voluntary resignations
You collect:
• Job level and/or job size (depending on how your organisation categorises jobs). This enables you to conduct ‘like for like’ analysis of men’s and women’s pay for the same or comparable work.
• Performance evaluation outcomes
• Pay increases
• Parental leave taken
3. Clean the data
Clean your data so that it is ready for analysis. If you report to WGEA, you will have done this as a part of the reporting process.
• All salaries must be annualised and in full-time equivalent amounts4. To determine base salary for part-time or casual employees, convert their pay to what they would earn if they worked for a full year at full-time hours.
• For employees paid in a foreign currency, convert the amount to Australian dollars using the exchange rate on the snapshot date. Compare your data with common drivers of the gender pay gap To uncover the drivers of your gender pay gap, it is useful to start with the most common drivers of the gender pay gap. These are listed below, along with guidance on how to test whether the driver affects the gender pay gap in your organisation. Common drivers of gender pay gaps are:
• Women and men paid differently for equal or comparable work (unequal pay)
• More men in more senior roles, more women in more junior roles
• More men in higher-paid jobs, more women in lower-paid jobs
• Unequal participation in part-time work
• Inequality in employee movements
Work through each driver to uncover whether it is affecting your organisation’s gender pay gap.
To unearth instances of unequal pay use the steps below:
1. Understand how your organisation classifies jobs. The data employers report to WGEA classifies jobs by a standard set of ‘occupations’. Many organisations classify jobs in standardised and more granular ways to enable a range of Human Resources activities, such as workforce planning and remuneration strategy. Your organisation may have job families, job levels/sizes, or other categorisation structures that can help you identify comparable work.
2. Calculate the average and median total remuneration for women and men in roles in the same classification. A discrepancy between what women and men are paid may indicate instances of unequal pay, that is, that women and men are being paid differently for the same or comparable work. In this case, you might need to look deeper into your data to understand whether tenure in role, skills and qualifications, or other factors may be driving a difference in pay for what appears at first assessment to be unequal pay. If you find instances of unequal pay in your organisation, you are legally obligated to remedy this. Some organisations set aside an annual budget for this purpose.
3. Repeat this analysis with other classifications or job families to uncover further instances of unequal pay. The example below (Table 3), shows how women and men may, on average, be paid differently for comparable jobs in an organisation.
Consider:
• Do tenure in role, skills and qualifications, or other factors drive a difference in pay for what appears to be comparable work?
• Are employees asked about their previous salary when they are hired? This can replicate gender pay gaps from previous employers.
• How are bonuses and additional benefits accessed by men and women?