What is pay equity?

Pay equity refers to equal pay for work of equal or comparable value. Equal pay is not just about equal wages. Equal pay takes into account discretionary pay, allowances, performance payments, merit payments, bonus payments and superannuation. Unequal pay is just one of the many drivers of the gender pay gap. 

What is 'equal pay'?

Equal Pay

Equal Pay is when men and women receive equal pay for work of equal or comparable value. In practical terms, this means that:

  • men and women performing the same work are paid the same amount
  • men and women performing different work of equal or comparable value are paid the same amount.

Equal pay is not just about equal wages. Equal pay takes into account discretionary pay, allowances, performance payments, merit payments, bonus payments and superannuation.

Organisations that are committed to equal pay will ensure that:

  • the wages and conditions of jobs are assessed in a non-discriminatory way. This is done by valuing skills, responsibilities and working conditions in each job or job type (even where the work itself is different) and then remunerating employees accordingly
  • the workplace's organisational structures and processes do not impede female employees' access to work-based training, promotions or flexible working arrangements.

Unequal pay is just one of the many drivers of the gender pay gap. 

Latest statistics

These are the current statistics on pay equity in Australian workplaces:

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51.5%

of orgs analysed their pay data for gaps
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56%

of orgs took action to close the identified gaps
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28.9%

of orgs reported pay metrics to executive

Organisations are required by law to provide equal pay to employees who are performing work of equal or comparable value. It is important that organisations meet their legal obligations, as failure to do so may result in the organisation and individuals being exposed to a range of legal claims. 

The Fair Work Act 2009

Australian legislation protects people from being discriminated on the basis of sex.

The rules and obligations for employees and employers are outlined within the Fair Work Act (2009) which is the primary piece of legislation governing Australia’s workplaces. It is the foundation to all standards and regulations for employment and something that employers in all industries and within all business sizes should be familiar with.

Where pay disparities exist in a workplace, The Fair Work Commission can make an equal remuneration order requiring certain employees be provided equal remuneration for work of equal or comparable value. An application for an equal remuneration order can be made by an affected employee, a union which is entitled to represent an affected employee, or the Sex Discrimination Commissioner.

For more information go to the Gender pay equity section on the Fair Work Ombudsman’s website. You may also wish to view our guides on managing the legal risks of pay equity below.

How it happens within organisations

Achieving gender equality, including gender pay equity, is a process that takes time and conscious effort. Gender pay equity is about ensuring women and men performing the same role are paid the same amount, and women and men performing different work of equal or comparable value are paid equitably. This requires a valuing of skills, responsibilities and working conditions in a non-discriminatory way.

In every occupational category, there is a gender pay gap favouring full-time working men over full-time working women. Technicians and trades workers and community and personal service workers have some of the highest gender pay gaps. Clerical and administrative workers and machinery operators and drivers have some of the lowest gender pay gaps. Causes of occupational gender pay gaps include women and men working in different types of organisations, a lack of women in more senior or high-paid roles within occupational categories, and discrimination.

Unintended gender biases in hiring, promotion, performance and pay decisions can lead to incidences of pay inequity. Any unfairness or perceived unfairness can negatively impact workplace productivity, employee engagement and morale, access to talent, and retention. That’s why reviewing the results of a comprehensive gender pay equity audit and developing a pay equity action plan is a feature of best practice talent management, while also providing a valuable insight into your gender diversity performance.

Pay gaps that occur within organisations

The WGEA encourages organisations to analyse their own pay data in different ways to uncover different pay equity issues and take action at all levels of the organisation. The Agency has developed a variety of resources to help employers undertake a pay gap analysis and address gender pay gaps in their organisations.

Like-for-like gaps Pay gaps between women and men undertaking work of equal or comparable value (comparing jobs at the same performance standard), for example, comparing two senior engineers in the same organisation.
By-level gaps Pay gaps between women and men doing the same or comparable work (comparing responsibilities, typically the same level in the organisational hierarchy), for example, comparing individuals within groupings of levels such as Key Management Personnel, managers, professionals.
Organisation-wide (or department-wide) Gender pay gap which is the difference between the average remuneration of women and the average remuneration of men across the whole organisation (or department).

Actions organisations can take to address pay equity issues

We encourage organisations to diagnose the status of pay equity within their workplace, set goals, and take practical steps to improve pay equity as part of their gender equality strategy. Below is a summary of actions an organisation can take to improve pay equity. 

Guide to gender pay equity

These steps have been pulled from our comprehensive Guide to gender pay equity. For more in depth information on each of these steps, please review this guide.

 

Build awareness and understanding

We recommend organisations get familiar with the key concepts and issues surrounding pay equity and equal pay. It is important to understand the 'what' and 'why' before getting to the 'how'.

A good starting place is this website and the range of resources we have on this issue. 

 

Develop a business case

To achieve internal support, organisations need to be able to quantify and communicate why addressing pay equity (and gender equality more broadly) is going to be beneficial for their workplace and business. 

 

Gain leadership commitment

Leadership commitment on pay equity can emerge in one of two ways:

  1. top down: commitment may already exist at the board, CEO or leadership team level and human resources is called on to act
  2. bottom up: human resources may raise pay equity as an issue with the leadership team or CEO, sparking a commitment to investigate further.

Pay Equity for CEOs

Six ways to demonstrate your leadership:

  1. Commit to the end-to-end process of addressing pay equity.
  2. Role model the removal of biases during the performance management process and the annual remuneration review.
  3. Role model the removal of biases around part-time work and flexible working arrangements.
  4. Actively communicate internally and externally on the importance of ensuring equal remuneration between women and men.
  5. Hold management to account on addressing any pay equity issues and removing bias in pay and performance decisions.
  6. Remove the roadblocks for your HR team to address pay equity issues.

Six immediate actions to take:

  1. Take ownership of pay equity.
  2. Place pay equity on the next executive team agenda.
  3. Request your HR team conduct a pay equity analysis and report back to you.
  4. Direct your HR team to the “Addressing pay equity” WGEA page.
  5. Commit to developing an action plan to address any gender pay gaps identified.
  6. Include metrics on gender pay equity in your report to the Board.

Five red flags to look out for:

  1. No gender pay gap analyses are conducted.
  2. Your team tells you ‘there are no gender pay gaps’.
  3. Remuneration policies and procedures do not specifically address pay equity.
  4. Inadequate (or no) action has been taken to address pay inequities.
  5. Gender pay gaps are ‘explained’ but not investigated and ‘justified’.

Pay Equity for Directors

Ten questions directors should ask:

  1. How often is a pay equity analysis conducted?
  2. What are the key findings and actions arising from the data analysis?
  3. What pay equity indicators can be reported to the board?
  4. What are the findings of the annual performance review analysis by gender?
  5. How do diversity and remuneration policies address pay equity?
  6. Is there a pay equity strategy and action plan to address any pay equity issues?
  7. What progress has been made on addressing pay equity issues?
  8. What are the key barriers inhibiting progress on pay equity?
  9. How is the CEO held accountable for pay equity?
  10. What is the process for ongoing monitoring of pay equity in the company?

Five red flags to look out for:

  1. Senior management is unaware of the issue of pay equity.
  2. No gender pay gap analyses are conducted.
  3. Negative employee perceptions about fairness in engagement surveys.
  4. Remuneration policies and procedures do not specifically address pay equity.
  5. Inadequate (or no) action taken to address pay inequities.

Pay Equity for Managers

Gender pay gaps: checklist for managers

The following checklist outlines actions individual managers can take to ensure they are actively involved in the removal of gender bias from pay and performance decisions

 

When Action
Overall
  • talk to your HR / team about pay equity
  • obtain and review your organisation’s remuneration policy
  • ask for a data analysis to be conducted for your division, department or team
  • work through the causes of like-for-like gaps
  • identify specific actions to address these causes
  • check in with your own assumptions and views on part-time and flexible work arrangements
  • support pregnant women and mothers returning to work to continue to be valued members of the workforce with access to the same opportunities as their colleagues
  • talk to your team about what your organisation is doing
  • consider whether higher remuneration for greater tenure is justified
  • role model the utilisation of flexible working arrangements
  • train managers in how to manage employees who adopt flexible work practices
  • build an inclusive culture and call out any resistance to employees on part-time or flexible working arrangement

At time of commencement
  • check that graduates are starting at the same salary
  • look at the impact the commencement salary will have on like-for-like gender pay gaps
  • have HR review the commencement salary
At the time of promotion
  • review promotion rates by gender
  • check if part-time staff have access to the same promotion opportunities
As part of the performance management process
  • ensure KPIs are clear from the outset
  • provide regular feedback to both women and men in your team and the opportunity to improve performance
  • ensure feedback is objective and that women are not penalised for showing strength and determination
  • review performance ratings by gender to identify any bias
  • conduct performance rating calibration meetings to ensure consistency across the organisation, divisions and teams
  • review the alignment between discretionary pay and performance ratings
  • include employees on parental leave in the performance review cycle

Remuneration decisions
  • take corrective action on like-for-like gaps
  • build into your annual budget a pool for corrective action
  • ensure employees in the same or similar roles have the same access to levels and types of discretionary pay
  • consider the overall pay equity impact of each remuneration decision.

Identify and analyse pay gaps

A critical step in taking action to address and improve pay equity in your organisation is to review the data, identify any instances of unequal pay and understand what is driving any gender pay gaps. The more detailed your analysis, the more you will be able to tailor a strategy and action plan to address your organisation’s specific issues.

WGEA Gender Pay Gap Calculator

We have developed a gender pay gap calculator to assist organisations to identify and analyse the causes of the various types of organisational gender pay gaps.

Note: The calculator is an excel workbook (.xlsb file) and you will require Microsoft Excel in order to open it. You may also need to enable macros.

 

Strategy and action

When that the problem is understood and diagnosed, your organisation will be in a position to strategise and take action. For detailed list of potential actions, please check out the Guide to gender pay equity.

Examples of actions

Ensure your organisation carries out job evaluations and grading processes in a gender-inclusive way. See our Guide to Australian standards on gender-inclusive job evaluation.

Embed gender pay equity into your organisation's remuneration policy (or create one from scratch if your organisation does not have one). See our Quick guide to designing an equitable remuneration policy.

 

Review, refine and report

It is important to track progress against the goals and targets set. From there, you will know whether any areas require refinement. Pay equity is something organisations need to maintain, monitor and continually improve on. 

Pay equity and legal risk management

In collaboration with the Workplace Gender Equality Agency, Dentons has developed this briefing note which outlines the legal framework related to pay equity. This briefing note also outlines key considerations for organisations in managing their legal risks at each of the six stages of the pay equity journey.

Gender pay equity in awards and enterprise agreements

Awards and enterprise agreements are common methods of setting pay for organisations. Data from the Australian Bureau of Statistics (ABS) confirms that gender pay gaps are less prevalent when pay is set by an award or collective agreement. 

Guide to gender pay equity

This guide will help you diagnose the status of pay equity in your organisation, set goals, and take practical steps to improve pay equity as part of your gender equality strategy.

Gender pay gap calculator

The Agency has developed the gender pay gap calculator to assist employers to identify and analyse the causes of gender pay gaps within their own organisation.

Guide to Australian standards on gender-inclusive job evaluation

To support organisations in adopting the standards, the WGEA has worked with a committee of job evaluation and equity specialists to produce a guide to the Australian Standards on gender-inclusive job evaluation and grading.

Quick guide to designing an equitable remuneration policy

All organisations, regardless of size, benefit from a remuneration policy, whether remuneration is set by award, enterprise agreement or common law contract.

Pay equity for small business

Small businesses face a unique set of issues when it comes to managing and improving equality between women and men in their workplace. The Workplace Gender Equality Agency, in collaboration with economic Security4Women, has developed a three step guide for small businesses to address pay inequity.

Video resources

Latest news

50 years since the “equal pay” principle: how far have we come?

This year marks 50 years since the landmark 1969 equal pay decision that first saw Australian women win the right to be paid the same as men for doing the same work, or work of equal or comparable value. 

Take the six steps to pay equity

More employers than ever recognise the importance of looking at their own data when seeking to improve gender equality within their four walls. Workplace Gender Equality Agency (‘WGEA’) data showed that in 2018, 40% of organisations conducted a gender pay gap analysis.

Pay gaps persist across all industries and occupations

This year’s WGEA data shows that year-on-year the gender pay gap has trended downward each year However, for the fifth year in a row, the gender pay gap persists across all industry and occupations.