Pay Equity Review: A Practical Starting Point for HR

A pay-equity review tests whether compensation differences can be explained by relevant factors and whether the employer’s practices create unjustified gaps. It is not the same as giving every employee the same salary.

Define the legal and organisational scope

The Code on Wages, 2019 prohibits gender discrimination in wages by the same employer for the same work or work of a similar nature and addresses discrimination in recruitment and conditions of employment subject to its terms. A broader organisational review may examine gender and other groups under applicable law and policy. Obtain legal advice on scope, privilege and remediation before analysing identifiable data.

Build a reliable dataset

Use employee, role, grade, location, employment type, fixed pay, variable opportunity, allowances, effective dates and legitimate explanatory factors. Reconcile with payroll and HR master data. Missing or inconsistent job levels can make sophisticated analysis misleading.

Define comparable work

Compare actual responsibility, skill, effort, decision authority and working conditions—not title alone. Two “manager” roles may differ substantially; two differently named roles may perform similar work. Document job group decisions.

Start with descriptive checks

Review representation and pay distribution within comparable groups. Examine starting pay, increases, promotion outcomes, variable awards and exceptions. An overall average can hide gaps within grades or reflect different workforce composition, so do not treat it as a diagnosis.

Investigate individual and process explanations

Relevant factors may include role scope, sustained performance evidence, scarce skill, location or experience where genuinely connected to pay. “Negotiated better” should not automatically end review; repeated negotiation differences may reveal an inconsistent starting-pay process.

Use statistical analysis proportionately

Larger datasets may support regression or other methods with specialist input. Small groups often require careful case review. A model can identify unexplained patterns but does not by itself decide legal liability or the correct remedy.

Remediate without reducing pay

Correct data first, then identify pay adjustments, process changes or role clarification. The Code on Wages states that compliance with gender wage equality should not be achieved by reducing another employee’s wage. Document approvals and effective dates.

Fix upstream decisions

Review salary ranges, offer approvals, exception governance, promotion criteria and manager discretion. Otherwise the same gap can return after a one-time adjustment.

Protect confidentiality

Limit access, report groups carefully and avoid exposing individual salaries in small teams. Communicate the purpose and actions without making unsupported claims that every difference has been eliminated.

This article provides general information, not legal or statistical advice. Pay-equity work should be designed for the employer’s jurisdictions, workforce and current obligations.

Review the full compensation journey

Starting salary, annual revisions and promotion adjustments can each create or widen gaps. Examine who receives off-cycle increases, retention payments, acting allowances and higher variable targets. A review limited to current fixed pay may miss material differences.

Example of an apparently explained gap

Two employees in comparable roles differ because one entered through an urgent external offer and negotiated above range. The fact explains the transaction but does not establish that the continuing gap is appropriate. HR should check range position, performance, later revisions and whether urgent hiring repeatedly advantages one group.

Govern remediation

Set decision rights, budget, effective date, communication and monitoring. Correct clear errors quickly. For broader adjustments, use consistent criteria and document why each case is included. Do not require affected employees to negotiate the remedy individually.

Repeatable control

Add equity checks to offer approval, salary review and promotion cycles. Monitor range exceptions and require expiry or review dates. A periodic review is useful only if upstream decisions are also controlled.