Is it Time to Conduct a Pay Equity Review?

The importance of reviewing and analysing pay equity is steadily increasing. As companies continue to strive to foster diverse, inclusive, and fair workplaces, a seemingly critical component of this is their commitment to pay equity.

Sadly, it’s no secret that there is still a significant gender pay gap (women working full-time in the US are still only paid 84% of what men earn for the same job), and so it’s no wonder that we are beginning to see pay transparency rear its head on a legislative level.

In the US, whilst there are no federal laws around pay transparency specifically, on a state level we are seeing the tide changing, with eight states now making it statutory. These include states such as California (employers must provide the pay scale for a position to an applicant after an initial interview), New York (employers must include a salary range in job postings), and Maryland (employers must provide a wage range upon the applicant’s request).  

In the UK, organizations with 250 or more employees are required to publish annual reports on their gender pay gap, under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.

And a huge development has now come in the form of a new landmark workplace law from the EU, the EU Pay Transparency Directive, which calls for employers to conduct thorough assessments of their compensation – including in-kind benefits, basic pay, bonuses and other incentive pay – and report their results publicly, as well as providing salary transparency to candidates. This directive must be enforced in all EU countries by June 2026.

It’s likely that the importance of pay transparency will continue to gain momentum, so those employers who are already challenging pay secrecy and engaging in reviewing their pay equity are the ones that will be ahead of the curve – and this is without mentioning all the business benefits that these practices can offer:

• Risk Management – as seen above, compliance is a huge factor when it comes to reviewing pay equity. Non-compliance can result in significant legal repercussions, including costly lawsuits, fines, and damage to a company’s reputation. So, conducting regular reviews will help identify and rectify any discrepancies, significantly mitigating legal risks (especially considering 20% of large UK companies have neglected to conduct gender pay gap assessments despite being obligated to!)
• Attracting and Retaining Talent – 77% of Gen Z workers and 63% of Millennials consider a company’s diversity, equity and inclusion (DEI) policies as a key factor when deciding where they want to work. With fresh new talent now being drawn to companies that demonstrate a commitment to fairness and equity, those companies that are transparent about their pay equity efforts are going to be more attractive. Additionally, retaining top talent becomes easier when employees see evidence of these equitable pay practices.
• Enhancing Employee Trust and Morale – employees who believe they are compensated fairly are more likely to feel valued and respected. When pay equity is ensured, it fosters a sense of trust and loyalty amongst a workforce, which in turn leads to higher employee satisfaction and morale. On the flip side of this, perceived pay inequities can lead to dissatisfaction, reduced productivity, and higher turnover rates.
• Strengthening Corporate Reputation – in the age of social media and increased transparency, a company’s reputation is more vulnerable than ever. Public knowledge of pay inequities can quickly damage a company’s brand and consumer trust. Conversely, companies known for fair pay practices enhance their reputation, gaining the trust of customers, investors, and the public.

When it comes to the reviewing and maintaining of pay equity, we can help. By conducting a pay audit, analysing and processing this data, and using it to develop transparent compensation policies, employers will be able to remain on top of their compliance whilst also reinforcing their commitment to DEI and strengthening their reputation. In addition to this, we will train managers and in-house HR personnel, equipping them with the knowledge and understanding to be able to continue regularly reviewing pay equity to ensure that it remains a priority.

To discuss the support we can offer in conducting your pay equity review, please get in touch with us today.