Fair Reward includes multiple dimensions
Fair pay has been a topic of importance for employers. It has become even more important due to the upcoming voice of stakeholders, society and regulators as well as the increased preference of (potential) employees to work for companies paying fair. Fair pay means that employees regardless of gender and ethnicity receive equal pay for equal work have equal growth opportunities and are equally recognized for performance. Differences in pay arise due to a complex mix of (non) demographic factors such as gender, performance, location and time in role. Key in advocating pay fairness is transparency in pay and diversity.
Are you prepared to disclose the numbers on fair pay and improve equal (growth) opportunities within your organisation?
Key aspects of fair pay
- Equal Pay
- Adequate Wages
- Transparency & Reporting
Equal Pay
Equal opportunities and associated equal pay is no longer just a legal topic. For many organisations, it is also important in relation to business continuity; to attract diverse groups/talents reflecting customers and society as an attractive employer. Being able to offer diverse role models, retain and attract diverse talent is essential for business operations.
The prohibition of discrimination based on gender, background and age is embedded in many constitutions. However, the link between age discrimination and pay is still often debated, given the value that seniority and repetition of performance of tasks and responsibilities can bring. The difference in value related to background and gender is no longer up for debate.
Gender | A strong focus in legislation and reporting is on the (in)equality in gender and gender pay
The benefits of gender equality and a diverse workforce continue to increase. By committing to diversity and equality, you improve your employer and company brand which enables you to attract and retain the best talent and understand and service your clients. Your data on this topic and your improvement efforts may directly affect your attractiveness as employer, value chain partner and investors.
Show that you’re paying people equally
Your commitment starts with insights and can even lead to external certification. PwC helps clients with internal benchmarking insights, job grading for equal work measurement, HR policy and process review and dashboarding tools, but more and more organisations are also opting for our external certification on equal pay through EQUAL SALARY certification.
Adequate Wages
Paying adequate (living) wages and demanding adequate (living) wages in the value chain of your organisation was always the right thing to do. Its contribution to ensuring fair competition, promoting economic and social progress; to building fair and resilient economies and societies has been set out by the European Pillar of Social Rights.
Paying and demanding adequate wages to contribute to the No Poverty SDG Goal (nr.1, 2015) has positively affected pay gaps and contributed to minimizing and eliminating child labour and modern slavery in many countries that our clients operate in.The role of living wage is all the more important during economic crises and essential for a sustainable recovery and an inclusive economy. Political instability and a subsequent energy crisis on the European continent in 2022 has shown how a minimum wage and a living wage can grow apart in a short time and lead to working poor within a few months.
Our pan-European partnership with Wageindicator enables us to provide our clients with data for emerging reporting requirements and needed insights.
Transparency & Reporting
Different (EU) legislation and non-financial reporting requirements require more insight into organisations' reward systems. For instance, the CSRD not only requires insights in adequate wages in the value chain and the gender pay gap, but also what strategy, policies and measures an organisation is taking to reduce the gaps.
Relevant fair reward regulations:
- Corporate Sustainability Reporting Directive
- European Sustainability Reporting Standards
- Global Reporting Initiative
- Dow Jones Sustainability indices
- EU Pay transparency directive
- Dutch proposed law on equal pay for women and men.
The regulations contain various transparency and reporting obligations such as:
- Reporting requirement on gender pay gap based on average hourly earnings
- Differences in the ratio of basic salary and secondary remuneration components between men and women by employee category
- Gender-neutral remuneration policies and career development
- Information duty of employers to provide employees with insight into wage criteria and wage progression
- Equal pay for equal work
EU Pay Transparency Directive will enter into force on 6 June 2023
This directive sets out pay transparency measures, such as pay information for job seekers, a right to know the pay levels for workers doing the same work or work of equal value, as well as gender pay gap reporting obligations for companies with more than 100 employees (both public and private companies). EU member states will have three years to transpose the directive into national legislation.
Risks and benefits
Equal pay is a legal requirement. Non-compliance could result in claims and high fines. A broader approach to achieve fair pay reduces legal risks.
Fair pay helps to avoid reputational damage and to build a positive brand as equal opportunity employer.
Ensuring and disclosing fair pay are high impact interventions. It helps to attract and retain talent, to improve employee satisfaction and to increase productivity and performance.
PwC, your partner in fair pay audits
PwC can help with numerous activities around fair pay, from a broader HR perspective, such as
- Audits to measure fair pay (e.g. pay gaps, pay ratios), and assistance with respect to its reporting
- Design and review policies around diversity, performance and remuneration
- Analyse Legal risk and advice on internal policies to mitigate these pay gap related risks going forward
- (Re)design job frameworks, job grading and salary schemes
- (Re)design performance and talent management frameworks
- (Re)design (global) mobility policies
- Reviews and optimization of internal processes, communications and implementation support
- Training and coaching teams
PwC is a leading financial audit firm with extensive experience in fair pay audits. A worldwide network allows us to run global audits in an efficient and consistent manner. We have specialists in HR, Reward, Legal & Diversity and a successful methodology for in-depth quantitative & qualitative analysis. This puts us in a strong position to provide a comprehensive review enriched with subject matter expertise. Besides, we can advise on strategies to reduce the gaps and related risk.
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