Small businesses urged to comply with the law on pay

3 September 2010

Smaller firms are being encouraged to examine their pay systems to make sure they are not breaching the law on equal pay.

It is forty years since the Equal Pay Act was introduced, but, on average, women are still paid 16.4 per cent less than their male counterparts.

The gap in gender pay stands at 21.6 per cent in the private sector compared with 14.6 per cent in the public.

Now the British Chambers of Commerce (BCC) and the Equality and Human Rights Commission (EHRC) have published a guide to help smaller employers understand their obligations on abolishing pay disparities.

The guidance forms part of a drive to improve pay transparency in the workplace.

The process set out in the guidance, the BCC said, is relatively simple for a small employer and should take no longer than four hours. 

By reviewing their pay policies, SMEs will be following a trend among larger firms who are increasingly carrying out pay audits to ensure male and female employees who do work of equal value are rewarded accordingly and fairly.

The BCC and the EHRC emphasised that pay audits bring real business benefits, helping to attract the best employees, bolstering loyalty among staff and safeguarding against possible employment claims.

David Frost, the BCC's director general, said: "Businesses want to pay people fairly for the job that they do. This guidance should help smaller businesses analyse any pay gap and make any changes required by law.

"Taking action now to make pay systems transparent and fair should help businesses recruit the best talent to enable the private sector to drive economic recovery."

Dr Jean Irvine, Commissioner at the EHRC, added: "Employers need pay systems that are both transparent and fair. While transparency is not enough in itself to reduce the pay gap between men and women, it does provide clarity; it is difficult, if not impossible, to resolve a problem that cannot be seen.

"What we ask of small and medium size employers is not difficult; it takes minimal time and effort but can offer a real return. Linking equal work to equal pay will see employees rewarded fairly for the work they do. 

"Employees will enjoy the benefits of working for a company which actively promotes equality while employers will protect themselves from a potentially costly and time consuming equal pay claim."

A copy of the guidance is available at: www.equalityhumanrights.com/equalpay-quickstart