5 steps towards achieving equal pay in your SME

As we emerge from lockdown, many businesses are facing skills shortages and are seeking to improve their practices of how to attract new and diverse talent. It can be overwhelming to know where to start to improve workplace practices when it comes to pay equality.

All Victorian workplaces have a responsibility to ensure they are safe, fair, and do not discriminate. Yet, some workers are not paid equally for their work.

The problem of unequal pay for women is firmly established. It is even more of concern when compounded with also 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 (the Commission) to conduct research to improve understanding of gender pay (in)equality in small to medium enterprises (SMEs). The report, Equal pay matters: Achieving gender pay equality in small-to-medium enterprises (Equal pay matters report) was launched on Equal Pay Day, in August 2021.

The report found that SMEs face different challenges to larger organisations when addressing pay equality. This includes having comparatively informal processes, and less of an ability for long-term planning due to their smaller revenue streams. Achieving gender pay equality in SMEs therefore requires a tailored response that addresses their distinctive characteristics and the barriers they face to equal pay, avoiding a ‘watered-down’ or ‘simpler’ approach of what is expected of large organisations.

Importantly, 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. This can have wide ranging impact on all Victorian businesses and the Australian economy.

But given these challenges, it can be hard to know where to begin. To get started, here are five steps to help achieve equal pay in your SME.

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, SMEs 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 the concept of equal pay and their legal obligations to ensure they prevent equal 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 renumerated 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 reputational damage.

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.

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 4 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 Commission’s research 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, and 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.

4. Connect with your professional networks

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

It is also important to also 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 Equal pay matters 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.

5. Participate in a workshop

To support SMEs to address pay equality, the Victorian Equality Opportunity and Human Rights Commission has now partnered with Industrial Relations Victoria and the Victorian Chamber of Commerce and Industry to deliver the first three recommendations of Equal pay matters report – to develop education and training for SMEs so they can better understand gender pay inequality, its drivers and why it matters.

The Pay Equality Project is working directly with SMEs to co-design a tailored response that addresses their distinctive characteristics, incorporating education, training, and resources.

Using human centred design principles, the Commission is running workshops to co-design innovative and tailored programs and resources specially designed for SMEs on gender pay equality.

How do I get involved?

If you’re interested in contributing to the design of the education materials you can register now for the next workshop in April.

You can also sign up to be kept in the loop of our training updates.

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.