Equal pay: key considerations for employers

Equal pay: More than an ethical and moral obligation

Equal pay is not only an ethical and moral obligation but also a legal requirement that employers must comply with. Various pieces of legislation highlight the importance of equal pay and place responsibilities on employers.

The Equal Pay Act of 1963 requires employers to pay men and women equally for equal work. This law prohibits wage discrimination based on gender within the same organization.

In the Netherlands, the proposed Equal Pay for Men and Women Act requires organizations with more than fifty employees to report pay differences to the works council annually. Organizations with more than 250 employees must submit salary data every three years to a certification body to demonstrate that they provide equal pay for men and women.

Additionally, the Corporate Sustainability Reporting Directive (CSRD) requires organizations to report on various ESG themes (Environmental, Social, and Governance), including equal pay. This directive obliges organizations to be transparent about their pay structures and demonstrate that men and women are paid equally.

What can you do?

1. Define equivalent roles and conduct a thorough salary analysis:

Identify which roles within your organization are of equal value. Use criteria such as required knowledge and skills, responsibility, job complexity, and impact on the organization. Then compare the salaries of employees in equivalent roles and identify any pay gaps based on objective criteria. Consider using an external benchmark to compare with market standards.

2. Develop a transparent pay policy:

Create a clear and transparent pay policy that is accessible to everyone within the organization. This policy should include criteria for salary determination, promotions, and bonuses. Ensure that the policy is regularly communicated and updated.

3. Implement an independent evaluation system:

To ensure objectivity and identify any biases or inequalities. Establish clear guidelines for salary decisions and promotions. Ensure these guidelines are accessible to everyone and consistently applied.

4. Provide training and raise awareness:

Organize training sessions and workshops for managers and HR professionals on the importance of equal pay and how to promote it. Raise awareness throughout the organization to foster a culture of equality. Make sure your HR team and managers are well-informed about equal pay legislation and fair pay principles. This helps to reduce unconscious bias.

5. Monitor and report progress:

Implement a system to monitor the progress of equal pay and report regularly. Use dashboards that provide insight into pay ratios and any discrepancies.

Salary benchmarking tool

A key component of achieving equal pay is using reliable data to support pay decisions. With our salary benchmarking tool, employers can compare salaries not only internally but also against market standards. This provides insight into competitive and fair compensation. Our tool offers real-time data and detailed reports on compensation across sectors, regions, and roles, enabling employers to make informed decisions.

How Forvis Mazars can help

At Forvis Mazars, we offer comprehensive HR consultancy services to support employers in implementing objective and forward-looking pay strategies.