Equal Pay legislation has been in place since the 1970's and was triggered by strike action by women machinists at the Ford Motor Company campaigning to be paid the same as their male colleagues.
In fact, the film “Made in Dagenham” documents the famous campaign.
Since then, Council workers have filed equal pay claims and equal value claims, which cost Councils nationwide billions of pounds in settlement, prior to the introduction of the Single Status Agreement in 1997. This was a commitment to ensuring equal pay for work of equal value, by implementing a nationwide job evaluation scheme to address historic pay inequalities.
A big threat to all businesses today
Fast forward to today, many businesses are quaking in the wake of the recent Asda equal pay case, which the employment tribunal upheld. This has had a ripple effect on the rest of the retail industry, particularly those defending their own equal pay claims – such as Sainsbury’s, Tesco, Morrisons, Co-op and Next. Ultimately, if all of the retailers lose their equal pay claims, it is estimated they could face £8bn in compensation payments to employees. The thing is, on the face of it, two jobs which seem very different, may have very similar demands, responsibilities and environments and therefore should be paid the same or similarly. That one employee who can demonstrate comparative worth (as with the Asda case) could cause a ripple effect across the whole organisation, leaving you with a very hefty backdated bill. The inconvenient truth is that any business, regardless of industry, shape and size could be vulnerable to an equal pay or equal value claim unless they can demonstrate that they have introduced a systematic and analytical way of determining a job’s worth and relative pay.
So how do organisations typically determine the right pay?
A very significant number just determine a salary that ‘feels right’. They may have a system in place for undertaking pay reviews associated with performance (or to award long service) but many organisations out there still just seem to ‘go with the flow’ or, do a bit of research on what salary their competitors are offering and establish theirs accordingly depending on whether they choose to lag or lead.
Hope they don’t find out…
This may work OK for a while, but as the company grows, salaries aren’t consistent and it becomes an almighty mess. They just hope that employees don’t find out what others are being paid, or they hope they don’t challenge this. They probably have had informal or formal grievances about pay, and either told them to stop grumbling and hoped they would go away or they paid them more money. Either way, unsatisfactory.
So how should it be done?
Implement an analytical job evaluation scheme. Job evaluation is a tool to ensure that you are paying fairly and equally in relation to comparative worth within your organisation. There are a few job evaluation schemes out there, but few have the flexibility of being adapted to businesses with specific attributes and skills which can be weighted in response to client preferences. After decades of experience of using other job evaluation schemes, we developed “The Cheviot Scheme” which like others, attributes a score for each facet of each job, but recognises the individuality of each business.
What is involved in implementing a job evaluation scheme?
Firstly, we will need a list of all jobs from you across your business to determine how many jobs need to be evaluated. Each unique job should be evaluated. We then issue job evaluation questionnaires to all representatives of each job for completion. Once we receive the completed questionnaire, we analyse the job with reference to factor scores defined by our scheme. We then attribute a total number of points to each job and place in rank order, to then assimilate onto a pay and grading structure which is determined following a pay modelling exercise with the client.
The client is left with the assurance of protection against any future equal pay claims and associated hefty pay out, and a fair and transparent pay and grading structure.