Equal Pay Proforma – Elected members

The following steps set out the process of Equal Pay risk management:

• Identify the risk – what process(es) does the council have in place to identify Equal Pay risks?
• Assess the risk – what is the probability that an Equal Pay risk may occur in the council and what is the potential outcome?
• Control the risk – what strategies, activities and/or interventions does the council have in place to nullify, reduce or mitigate the Equal Pay risk?
• Monitor and review – what governance infrastructure does the council have in place that monitors and reviews both the Equal Pay risk and control measures?

The Equality Act 2010 gives women and men the right to claim equal pay with a comparator of the opposite sex where they are doing equal work. A worker's work is equal to that of their comparator if it is ‘like work’ (essentially the same role), work rated as equivalent (under an existing job evaluation scheme) or work of equal value (as assessed but not yet under an existing Job Evaluation Scheme). A worker may assert their right to Equal Pay by raising a claim with an employment tribunal or in the civil courts. Where an Equal Pay claim is upheld, the tribunal/court will remedy the breach by inserting an equality clause into the worker’s contract of employment to provide for equal pay, including up to six years’ backpay, plus interest. This has the potential to incur significant liabilities upon the council. The right is not limited to equality of pay but extends to all benefits under the employment contract, including for example benefits under a pension scheme and annual leave.

Equal Pay is not concerned with whether pay is ‘fair‘ but only with whether discrimination between men and women is the reason for any inequality in contractual terms of employment. Although it is not a legal requirement, the Equality and Human Rights Commission (EHRC) – along with many other bodies, such as Advisory, Conciliation and Arbitration Service (ACAS); the Local Government Association (LGA); and the National Joint Council (NJC) – advise that the most appropriate method for an employer to adopt to ensure that its pay system delivers pay and benefits that are free from sex bias is to undertake regular reviews of its pay systems (pay and terms and conditions of employment).

Equal Pay is different from the Gender Pay Gap, which measures the differences between the average pay of male and female employees irrespective of job role, seniority or value of the work.

Equal Pay: Risk Management involves the process of identifying, assessing, controlling and reviewing those risks arising from inequality or inequity in pay and terms and conditions of employment that expose the council to financial, legal, strategic and reputational liabilities.

The impact of inequality or inequity in contractual pay and terms and conditions of employment arising from mis-management and/or mal-administration and/or otherwise could, in a worst-case scenario, expose the council to, and subsequently incur the council with, substantial financial, legal, strategic and reputational liabilities that may have significant implications on the council’s service provision, affecting residents, service users and the workforce.

An awareness and understanding of the risks arising from inequality or inequity in pay and terms and conditions of employment can help the council to effectively manage the risks by determining how best to identify, assess and mitigate the identified risks, and subsequently subject the control measures to monitoring, review and scrutiny.

The questions below are designed to support elected members to effectively discharge their responsibility to manage the risk of Equal Pay.

Identifying the Equal Pay risk – What is the process of identifying the Equal Pay risk?

• Do elected members have a common and shared understanding of Equal Pay; and how Equal Pay risks are managed?
• Do residents, elected members and staff know and understand the Pay Policy of the council; and its relationship with Equal Pay?
• Does the council embrace the spirit and purpose of its Pay Policy statutory obligation? Does it incorporate the council’s policy on Equal Pay?
• Are the council’s pay and reward strategies aligned to its equality frameworks?
• How does the council identify its Equal Pay risk?
• What were the findings and recommendations of the council’s most recent Equal Pay Audit (EPA)? Was it completed in accordance with EHRC (Equality & Human Rights Commission) guidance and within the last 3 years?
• Does the council embrace the spirit and purpose of Gender Pay Gap reporting?
• Do residents, elected members and staff know the findings and actions of the council’s most recent Gender Pay Gap report?
• Can the council’s leadership demonstrate confidence, supported with evidence, that its frameworks and processes are statutorily compliant, are operating in accordance with best practice and are adaptable to changing legal circumstances and developments?
• Does the council wholly own other entities and/or undertakings? If so, has the Equal Pay risk been fully assessed in terms of potential comparisons between the council and those bodies/between those bodies? Is an Equality Impact Assessment (EIA) in place and subject to review?

Assessing the risk – what is the probability that Equal Pay risks may occur and what is the potential outcome?

• Can the council demonstrate that it is legally compliant with its Equality and Pay obligations?
• Can the council demonstrate that it applies best practice in managing potential Equal Pay risks?
• Did the council’s most recent EPA identify any liabilities? Did the council implement control measures to address the liabilities? Are these control measures subject to review?
• Did the council’s most recent Gender Pay Gap report identify differences in the average and median pay between men and women in the workforce? Did the council implement appropriate actions? Are these actions subject to review?
• Is the council robust in its application of EIAs relating to changes to policy or in decision making at all levels of the organisation that have the potential to impact pay and/or terms and conditions of employment? Are the EIAs monitored and reviewed?

Controlling the Equal Pay risk – what are the strategies, activities and/or interventions in place to nullify, reduce or mitigate the Equal Pay risk?

• Is equality intrinsic and demonstrable in the council’s culture? How do we know?
• Does the council have appropriate, relevant and up-to-date Equality and Workforce strategies in place?
• Does the council use an analytical Job Evaluation Scheme (JES) to control the Equal Pay risk? If so, was the selection of the JES subject to due diligence and an EIA?
• Does the council use more than one JES? If so, why? Was this subject to due diligence; and is there a comprehensive EIA in place for the use of two JESs?
• Are the appropriate job evaluation inter-dependencies in place, and are the inter-dependencies functioning effectively and efficiently?
• Is the job evaluation process robust and free from bias?
• When, and how, will the application and administration of the JES(s) be reviewed?
• Does the council invest the necessary resources to manage and control potential risks arising from Equal Pay?

Monitoring and review – what is the infrastructure that monitors and reviews both the Equal Pay risk and control measures? 

• What is the governance framework to manage the Equal Pay risk?
• Who are the elected members that have the responsibility for ensuring that the Equal Pay risk is managed?
• Are there any gaps in the governance framework managing the Equal Pay risk?
• Is the governance timely and adequately resourced?
• Is the reporting and governance of Equal Pay open and transparent?
• Does the council’s governance infrastructure ensure that the Equal Pay risk is nullified; reduced or mitigated?