What is pay parity?
Pay parity, or pay equity, refers to equal pay for work of equal or comparable value. This means that when two employees perform the same role, or work of equal or comparable value, they should be paid fairly and consistently regardless of their gender, race, sexual orientation, disability, age or other protected characteristics under the Fair Work Act 2009 (Cth) and anti-discrimination laws.
In theory, the concept of pay parity is simple. In reality, pay inequity is a common occurrence across many industry sectors. Recent amendments to the Fair Work Act 2009 (Cth) have strengthened the focus on gender pay equity, requiring consideration of equal remuneration, gender-based undervaluation of work and gender pay gaps in certain Fair Work Commission processes.
The Workplace Gender Equality Agency (WGEA) has outlined a number of factors that can lead to pay inequality:
- Discrimination, gender and bias in hiring practices and remuneration offers.
- Women and men working in different industries where female-dominated industries –childcare, education, and social services – attract lower wages.
- Women’s disproportionate share of domestic work.
- Lack of workplace flexibility to accommodate caring and other family responsibilities.
Women’s extended time out of the workforce for pregnancy and as the primary carer of a child or children, impacting career training and progression opportunities.
Many of these factors also contribute to pay disparity relating to race, ethnicity, disability, sexual orientation and more.
The aim of pay parity is to eliminate discrimination and bias that influence pay rates for different employee groups. Private sector employers with 100 or more employees are also required to report annually to WGEA on gender equality indicators.
According to the WGEA, gender pay gap does not necessarily mean women and men are being paid differently for the same job. Often, gender pay gaps reflect broader workforce patterns, including representation in senior roles, industry segregation and workforce participation rates.
Who can be affected by pay disparity?
While pay disparity is often simplified as the pay discrepancy between men and women (the gender pay gap), there are other people who can be affected because of their:
- Age
- Race or skin colour
- Nationality or ethnicity
- Sex
- Sexual orientation or gender identity
- Mental or physical disability
- Religious beliefs or ethics
- Marital status, familial status, or employees affected by, or experiencing, family violence
- Political opinion or affiliation.
The above list is non-exhaustive. Many of these attributes are protected.
All of these groups are protected by general protections under the Fair Work Act, which means as a business owner, it is unlawful to discriminate against a prospective employee or employee because of protected attributes.
This includes full-time, part-time and casual employees, probationary employees, apprentices, trainees, and people employed for a certain period such as seasonal employees.
What is a pay gap?
Pay gaps occur when certain groups earn less than others while doing the same or similar work. Depending on the circumstances, pay gaps can either be considered fair or unfair.
Sometimes, employees are fairly rewarded with higher pay for having more experience or working for the same business for a longer period, However, there are occasions when staff are unfairly underpaid based on bias.
A worker’s pay should never be negatively impacted because of any protected characteristic. That’s why it’s important for businesses to find, measure and understand any underlying pay gap, so it can be addressed and corrected as quickly as possible.