Assessing the reasons for differences in pay and deciding on measures
Differences in pay have to have acceptable reasons
The Equality Act requires that the employer must account for reasons behind pay differences, if a review of groups based on job grade, duties or other grounds in the pay survey reveals clear differences between pay for men and women. If the workplace has established a remuneration system in which wages consist of pay components, the central components are inspected in order to clarify the reasons for the differences noted.
The Equality Act also requires that "if no acceptable reason is found for differences in pay between men and women, the employer shall take appropriate corrective action".
Therefore the pay survey does not only consist of describing salaries. An essential part of the pay survey is comparing salaries, discovering the reasons for differences in pay and assessing these reasons. Pay differences must have a reason that is acceptable according to the Equality Act. If this is not the case, then the differences in pay are in violation of the Equality Act. If, on the other hand, there is an acceptable reason for the differences in pay, then the difference is justified insofar as it is caused by that reason. Equal pay requires that each salary component in itself is non-discriminatory.
In addition to differences in difficulty, acceptable justifications for pay differences include factors such as personal performance, longer work experience, inconvenient working hours, the versatility of the employee or reasons related to the working conditions. The differences in pay can, for a specific reason and for a limited time, also be caused by organisational mergers, the introduction of a new remuneration system, changes in duties and market factors.
Measures to achieve equal pay
The measures concerning pay included in the equality plan depend on the cause of unacceptable pay differences. Measures should be as concrete as possible. It is also beneficial to include a schedule in the plan for when the pay-related measures will be carried out.
The issues that are revealed during the pay survey may also give cause to measures that are not directly related to pay. If for example women are underrepresented in better-paid task groups, the measures could be related to promoting women's career progression. It should also be made sure, however, that the remuneration system is not discriminatory as it is.
Pay is mentioned separately in the Equality Act as a topic which should be included in the measures of equality plans. If an equality plan does not include any concrete measures relating to pay, then the Ombudsman for Equality recommends that the plan includes a justification for why this is the case.
According to the Equality Act equal pay has to be realised between the employees working for the same employer. If the employer runs several units, then the employee can also compare their pay to the pay of employees working at another unit.
According to the European Court of Justice the Union's legislation on equal pay can be applied when the pay gap has 'a shared origin’ that causes the pay gap. This means that it is there is an official body responsible for unequal treatment that can guarantee equal treatment.
In equality legislation, the concept of pay is very broad. Pay means any financial benefits that employees receive from the employer either directly or indirectly in respect of their employment. These benefits may be paid on the basis of employment contracts, collective agreements or other agreements, but they may also be benefits paid voluntarily by the employer.
Pay includes the ordinary basic or minimum wage or salary and various supplementary allowances, performance-based bonuses and allowances based on working hours. Various fringe benefits such as company mobile phones, meals, cars and housing are also included in the definition of pay.
Sick pay, holiday pay and pay during parental leave are included in the definition of pay in the Equality Act. Pay also includes any compensation that the employer pays or is ordered to pay when terminating a contract of employment, as well as supplementary pensions and the pension benefits included in the pension system for Finnish civil servants.
The regulation in the Equality Act which prohibits pay discrimination does not only apply to pay, but also to all other terms of employment.
Comparisons of pay can principally be done for employees who are carrying out the same work or work of equal value for the same employer. Prohibitions of pay discrimination can also be invoked when carrying out work that is more demanding than the work of another employee who receives a higher salary nevertheless. In some other cases the employees may also be in a comparable position regarding benefits that are considered as part of the pay.
When judging whether or not the work is the same or of equal value, the work duties and the demands that these impose on the employee are used as a basis. The employee's personal characteristics or performance at work should not affect this evaluation. These circumstances may, however, be an acceptable reason for why employees carrying out the same work or work of equal value are being paid a different salary.
The preparation documents of the Equality Act state that the comparison should focus on the quality and content of the work duties and the working conditions. The evaluation must be based on the employees actual duties, not e.g. on the job title or the job description that has been agreed in the contract of employment if these differ from the actual duties.
Same work means equivalent or nearly equivalent work. From the point of view of the evaluation, the differences between the types of work are important: what the differences are and how often they occur.
The evaluation whether two types of work are of equal value should be based on the nature of the work under comparison. Sometimes it can be enough in these cases as well to simply compare the differences between the work duties. If the types of work are of a very different nature, the characteristics of the types of work that are being evaluated need to be specified and analysed. Important factors that are often mentioned are skill, responsibility, stress and working conditions. In other words, completely different kinds of work can be considered to be equally demanding –and therefore of equal value – as a whole.
Assessment system for job demands
In order to carry out pay comparisons and promote equal pay it is useful if the pay is based on a specific assessment system for job demands. However, this is not required by equality legislation. It is also not a prerequisite for the employee to demand equal pay for the same work of equal value.
Even if an assessment system for job demands is used as a basis for the pay, this does not necessarily guarantee that the pay is in line with the requirements of the Equality Act. It must be ensured that the evaluation system itself is non-discriminatory and applied in a non-discriminatory manner.
The European Court of Justice has expressed the principles that classification and assessment systems of work must fulfil for them not to be discriminatory (the Rummler case, 237/85):
1. The criteria governing pay-rate classification must ensure that work which is objectively the same attracts the same rate of pay whether it is performed by a man or a woman;
2. The use of values reflecting the average performance of workers of one sex as a basis for determining the extent to which work makes demands or requires effort or whether it is heavy constitutes a form of discrimination on grounds of sex, contrary to the directive;
3. In order for a job classification system not to be discriminatory as a whole, it must take into account criteria for which workers of each sex may show particular aptitude. The assessment system must contain components that value characteristics of both female-dominated work and male-dominated work, if both of these are relevant to carrying out the duties.
The person used for comparison, i.e. the employee whose salary is being compared to the complainant's salary, must usually be of the opposite gender. A woman can compare her pay to a man's, and vice versa.
The person used for comparison can, however, be of the same gender as the person suspecting discrimination if the employee has been treated differently regarding pay because of pregnancy, childbirth, parenthood or family responsibilities.
In some cases an assumption of pay discrimination can also be created based on the average difference in pay between female- and male-dominated groups of employees.
Employees may also not be discriminated against because of their gender identity or expression.
Carrying out a comparison of pay does not require that the salaries were paid out during the same period. The pay can also be discriminatory if an employee is placed in a less favourable position because of their gender than another employee who previously worked for the same employer. Therefore an employee can compare their salary to that of their predecessor. Comparisons of pay are also possible between permanent and temporary employees.
