4 ways SMEs can close the gender pay gap

It’s no secret that many businesses are facing skills shortages and attracting new and diverse talent can be difficult. Naturally business owners are looking for ways to improve their recruitment and retention practices.

A good place to start might be to review your business’s pay equality practices.

It’s a good idea to review your practices because all Victorian workplaces have a responsibility to ensure they are safe, fair, and do not discriminate. Yet, some workers are still not paid equally for their work.

The problem of unequal pay for women is firmly established and even more of a concern when compounded with being:

  • a parent or carer
  • Aboriginal and/or Torres Strait Islander
  • from a multicultural background
  • with disability
  • LGBTIQ+
  • from a lower socio-economic background.

Industrial Relations Victoria, supported by the Equal Workplaces Advisory Council, engaged the Victorian Equal Opportunity and Human Rights Commission to conduct research on gender pay (in)equality in small to medium enterprises (SMEs).

The report found that if properly supported, SMEs can play an integral role in reducing the gender pay gap and achieving gender pay equality in Victoria. To get started, here are four ways to help your business achieve equal pay.

1. Understand the concept of equal pay

SMEs make up a significant proportion of the Victorian workforce and economy. With approximately two in three employed Victorians working in an SME, they have the power to effect enormous change when it comes to achieving equal pay in our state.

The Equal Pay Matters report found that often SMEs have a limited understanding of equal pay and their legal obligations to ensure they prevent pay inequality in their organisation. Understanding both is key to establishing gender pay equality.

What does equal pay mean?

Equal pay or gender pay equality refer to work of equal or comparable value. This is when work of comparable skill, effort, responsibility and working conditions is valued equally. Unequal pay is driven by sex discrimination, the historical and systemic undervaluing of work traditionally associated with women, and the widespread segregation of women into low paid industries and jobs.

This means that women are not being recognised and remunerated equally which can have significant consequences for their lifetime economic security. Men can also be affected by this when denied access to flexible work.

What does this mean for my business?

Pay inequality can have a profoundly negative impact on individuals, businesses and society. Businesses who do not pay their workers fairly and equally may struggle, among other factors, to attract and retain staff, be vulnerable to legal claims, and risk reputation damage.

This video explains more about what equal pay means for you and your business.

What is the benefit to my business?

There are many benefits to achieving pay equality for your business, including:

  • attracting and retaining diverse and talented staff
  • attracting business opportunities
  • improved morale and productivity among your workforce
  • reduced risk to your reputation and brand.

This video demonstrates some of the benefits of equal pay to your business.

2. Learn your legal obligation

Everyone has the right to be paid fairly and equally for work of equal or comparable value. In the last two decades, the legal obligations to ensure equal pay have been enshrined in four key Acts:

  • Fair Work Act 2009
    The Fair Work Commission must consider equal pay in minimum wage awards, and it can make ‘equal remuneration orders’ to ensure equal pay.
  • Equal Opportunity Act 2010
    All employers have a positive duty to eliminate discrimination from the workplace, including unequal pay on the basis of sex.
  • Workplace Gender Equality Act 2012
    Non-public sector organisations with 100 or more employees must report on equal remuneration between men and women.
  • Gender Equality Act 2020
    Public sector organisations with 50 or more workers must take positive steps towards gender equality, including workplace gender audits, action plans, and progress reports.

3. Define your organisation’s values

To achieve equal pay, SMEs must take proactive steps to address policy, decision-making and practice. The report highlights that most SMEs do not have policies and practices on determining pay, have limited understanding and experience with gender pay reviews, and rarely review job descriptions outside the context of recruitment needs.

A good place to start when considering workplace practices and polices is to consider what your organisation’s values are. Where possible, workshop these with your employees and state them on your website, in documentation and policies.

Having clearly defined organisational values will help:

  • guide your decision-making and policy writing
  • build your branding and reputation for clients, customers and employees alike
  • avoid inherent workplace cultures that perpetuate gender stereotypes.

This video explains more about how your business can put values and processes in place to ensure equal pay.

4. Connect with your professional networks

Your professional networks can provide excellent support, and SMEs can learn how to address pay equality concerns from each other. Sharing your learnings with other SMEs can also resolve the external drivers of pay inequality including limitations in industry standards and bench marking frameworks.

It is also important to encourage your employees to connect with their professional networks, a key element of professional development. Employees can be encouraged to share their learnings with the organisation, which is another great way to build knowledge as well as team dynamics.

The report revealed that lack of professional development frameworks is a driver of pay inequality within SMEs. The report also found:

  • there are few opportunities to progress to senior roles
  • most SMEs do not have a formal structure for performance reviews
  • there are a higher proportion of women in administrative roles and men in leadership roles.

It is critical that employees have access to professional development opportunities to develop the capabilities to advance, whether within or beyond their current organisation.

How do I get involved?

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Where can I find more information?

Visit our website for more information on achieving pay equality in your SME.

Laura Smith

Senior Consultant | Victorian Equal Opportunity and Human Rights Commission

Laura Smith is the Senior Consultant for the Pay Equality Project, in the Education and Engagement branch of the Victorian Equal Opportunity and Human Rights Commission.

The Victorian Equal Opportunity and Human Rights Commission is an independent statutory body. Our role is to protect and promote human rights, promote fair treatment for all Victorians, and advocate for a diverse and inclusive state.