MPA Equal Pay Audit

Report: 10
Date: 7 June 2007
By: Chief Executive

Summary

This report sets out the arrangements for the MPA staff equal pay audit agreed as part of the 2006-07 pay negotiations. The report covers:

• The external and internal background to the equal pay audit.
• previous equal pay audit.
• The approach to carrying out the equal pay audit.
• Progress to date.
• The financial and equality costs and implications.

A. Recommendations

That committee note the report.

B. Supporting information

External and internal background to equal pay audit

1. Externally, there is a legal requirement to comply with the Equal Pay Act and other legislation, which can give rise to equal pay claims. The Gender Equality Duty also requires public authorities to promote equality between men and women and eliminate gender discrimination. Equality reviews are generally regarded as good practice in the Code of Practice issued by the Equal Opportunities Commission and an essential requirement in orer to achieve level 3 of the Equality Standard for Local Government (ESLG).

2. Internally, as part of the 2006/2007 pay negotiations, it was agreed with the trade unions that an equal pay audit would be carried out by April 2007. It is three years since the last equal pay audit.

Previous equal pay audit

3. An equal pay audit, commissioned by the MPA, was carried out by the Hay Group in March 2004. The purpose of the audit was to review pay, including an audit of individual salaries and a review of MPA policies, processes and practices. The recommendations of this audit are attached as Appendix 1. These recommendations have either been implemented or are to be covered as part of the current review of HR policies.

4. As part of the 2006/2007 pay negotiations, it was agreed that a further equal pay audit would be undertaken in 2007. A new pay and grading structure has recently been implemented following the 2006/2007 pay negotiations. Essentially, the new pay and grading system sees a re numbering of the Premier and 7 Bands into 9 Grades and the elimination of the shadow band which is now Grade 5. A summary of the new pay and grading structure is attached as a background paper.

The approach to carrying out the equal pay audit

5. The MPA is working in close conjunction with the Hay Group to undertake a review of equal pay, including an audit of individual salaries, review of policies, processes and practices and external benchmarking.

6. We have instructed the Hay Group to oversee a joint MPA/Hay Group project team that will conduct an analysis for all staff across the organisation, identifying any pay issues that exist between genders, ethnic groups, religion or faith, sexual orientation and disability. The Hay Group have been specifically asked to review the MPA incremental scales in light of the European Court of Justice ruling in the case of Cadman, which ruled that using length of service to justify pay differences between men and women must be objectively justified. As an employer that seeks to implement best practice across all of its diversity strands the equal pay audit is not limited to reviews comparing the pay of men and women.

7. In conducting the audit the MPA has followed the structure of the Equal Opportunities Commissions five step equal pay review kit to ensure that the audit is conducted in accordance with published best practice.

Progress to date

8. The HR function is in a state of transition and therefore the internal capacity to carry out the audit by the end of April 2007 has been underestimated. Following discussions with the trade unions it was agreed that a joint Hay Group and MPA approach would be taken forward to enable the work to be carried out by the end of June 2007.

9. It is intended to finalise the review to coincide with the beginning of the 2007 negotiations in June 2007. With this in mind a four week project plan is in place to ensure the work is carried out in a timely manner.

C. Legal implications

The failure by the MPA to properly identify, investigate and remedy any differences in pay which cannot be justified on the grounds of a genuine material factor could give rise to equal pay claims and reputational risk. In addition, an Equal Pay Review conducted in 2004 cannot be assumed to still be correct in 2007 or indeed even earlier given the changes that have occurred in the organisation. It is important that the MPA assesses whether any of the recommendations put forward since the last audit have been carried out. By monitoring and reviewing equal pay on an ongoing basis, we can ensure that the MPA’s practices are kept fully up to date.

C. Race and equality impact

Equality issues are explored in full in the approach being carried out.

D. Financial implications

There is a direct financial implications arising from the equality audit given the joint Hay Group/MPA approach. However the MPA is seeking to minimise the costs by adopting a joint approach whereby the analysis is carried out internally with an oversight role for the Hay Group.

E. Background papers

• MPA Salary Structure 2006/2007

F. Contact details

Report author: Nicholas Toko, Interim Head of Human Resources, MPA.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1

MPA Equal Pay Audit 2004 – executive summary and summary of recommendations

Executive summary

The Metropolitan Police Authority has selected HR policies and procedures in place that support the achievement and delivery of its Equal Pay responsibilities. Particularly, MPA’s risks are reduced through:

• Simplicity of the reward structures
• The consistency of the benefits provided

However, there are a number of recommendations made within this report that MPA should consider in order to further enhance the consistency with which pay decisions are made and to address the areas of concern identified in the audit.

Summary of recommendations

• To review and address any individual cases identified within the audit

The key process recommendations are:

• To ensure that a clear grading framework that supports the segmentation of jobs by job evaluation (preferably single Know How steps) and clearly identifies comparators
• To review the mechanism for determining start salaries and implement a clear, consistent policy
• To review the mechanism for determining salaries on promotion or re-grading and implement a clear, consistent policy
• To ensure that there is clear documented support for all pay related decisions

Separately, you may also want to consider offering training in recruitment and equality issues for those members of the committee, who, whilst not employees and therefore not accessing normal training, play an integral role in the selection and appointment of senior employees.

By addressing these areas, MPA will ensure that it has a more rigorous approach to supporting equality and diversity, whilst also actively managing future risks and liabilities.

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