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.
Barriers to pay parity
Achieving pay parity is not a straightforward or simple task. It goes beyond just simply increasing salaries for disadvantaged groups. It requires addressing the unbalanced representation of women and minority groups in lower valued roles.
Cultural and social conventions have embedded expectations that women perform most of the unpaid labour at home, such as looking after the home and as the primary care provider of children. This leads to the conclusion that women have less time to complete paid work and are more likely to experience times of unemployment or engage in part-time work.
Constant gaps or reduced working hours can damage career prospects and lead to women having to frequently start over. Delaying their chances of achieving senior and higher paying roles.
A complicated financial climate means businesses are facing rising operational expenses. These cost pressures can make pay parity even more challenging to achieve.
What can businesses do to increase pay parity?
Beyond the legal requirement to avoid discriminatory pay practices and to provide equal remuneration for work of equal or comparable value, pay employees equally, business owners should regularly review employee wages and check for pay disparity between people doing the same or similar role.
When reviewing an applicant’s CV, ensure information about the candidate’s identity is obscured when shortlisting for an interview. This can help remove unconscious bias from the hiring process.
Salary is not the only way to compensate employees. Employers can offer other incentives such as flexible working arrangements, bonuses, additional paid leave, discounted gym membership, and an employee assistance program (EAP) to provide mental health support.
The business benefits of pay equity
Businesses that have established a reputation for promoting pay equity and gender equality can attract and retain high performing employees. It puts a spotlight on the respect, fairness, and commitment the business has towards all their employees. Highlighting the business is an inclusive workplace.
If you’re a business owner with multiple employees and need advice on pay and wages, call Peninsula. If you’re not sure where to start to achieve pay parity, our team can help create a tailored pay policy for your business and industry.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.