EOWA Business Case for Pay Equity Manage risk

Australian workplaces are legally obliged to pay equitable wages. The risk of litigation occurs when organisations fail to meet regulatory requirements for equal pay, or in instances where discrimination on the basis of gender is alleged. The costs faced by an organisation can be divided into direct and indirect costs:

• Direct costs of litigation have been well publicised and tend to incorporate the costs of court time, legal representation and any eventual damages which may be awarded to the applicant(s). (It should be noted though that although damages apply in discrimination cases, there are no damages and little back pay in the industrial jurisdiction.) In addition, employers should consider the potential costs of applying a tribunal outcome to similar classes of employees, or applying the logic of the argument to cover groups of employees;

• Indirect costs are harder to quantify but may present a more serious concern to businesses than direct monetary outlay. They can include increased staff stress, an adverse reputation as an employer, damaged workplace relations and lower output. The legal right to equal pay was introduced in Australia under legislation and by award provisions.

The Federal Sex Discrimination Act 1984 prohibits direct and indirect discrimination on the grounds of sex, marital status, pregnancy and potential pregnancy in the terms or conditions on which employment is offered or afforded to the employee. This Act also prohibits the denial of access based on an employee’s gender to opportunities for promotion, transfer, training or any other benefits associated with employment.

The Workplace Relations Act 1996 requires that ‘rates of remuneration [be] established without discrimination based on sex’. This definition is contained in Article 1 of the International Labour Organisation (ILO) Convention (No. 100) concerning Equal Remuneration for Men and Women Workers (also known as the Equal Remuneration Convention 1951), which was ratified by Australia in 1974.

The equal remuneration provisions of the Workplace Relations Act cover a broad range of workers regardless of their length of service and their employment status. Coverage does not depend on whether a worker is part or full time, permanent or temporary.

Australia is also a signatory to two international conventions mandating pay equity:

• The International Labour Organisation’s Equal Remuneration Convention 1951 (ratified June 1983) requires that signatories ensure the application to all workers of the principle of equal remuneration for men and women workers for work of equal value. The Convention also requires that measures be taken to promote the objective appraisal of jobs on the basis of the work to be performed;

• The United Nations’ Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) (1979, ratified January 1985) requires that employers address equal employment opportunity, training, promotion and, in particular, equal pay for work of equal value.

However, litigation under these conventions is limited by the extent to which they have been ratified and implemented in Australia through domestic legislation.

In analysing the risks posed by unequal pay conditions for male and female employees, employers need to weigh the financial costs of corrective pay adjustments against the potential direct and indirect costs of taking no action.

Of specific relevance is the Case Law module of this tool.

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