“Say what you pay”: salaries to be published on job adverts.

On 5 November, the Government announced that it intends to legislate to require employers to publish salary information in job adverts. The “say what you pay” policy follows a consultation on reforming equal pay and pay discrimination law earlier this year.

These reforms will shine a fairly unforgiving light on employers' existing pay arrangements and are likely to prompt challenges from current and prospective employees.  So what can employers do to prepare? 

What will change?

It will be a legal requirement for all job adverts to include salary details - the days of just claiming a “competitive” salary will be over.  The Government says that legislation will be brought forward “as soon as possible” but hasn't given a definitive timescale.  

The original proposals were contained in a consultation on equal pay and pay discrimination. The consultation proposed requiring all employers to publish pay information in job adverts. Where a role is not advertised, the proposal was that the employer would instead have to provide the information to the candidate in writing before interview.

Government figures indicate that only 41% of employers publish salary ranges and only 18% publish a specific salary, so this would be a significant change in the recruitment market. 

International comparisons

The EU Pay Transparency Directive also requires job applicants to be given information about the initial pay level or range for a role, either in the vacancy notice or before interview. However, the EU regime goes considerably further.  It also prohibits employers from asking applicants about their pay history, gives existing workers rights to information about their own pay and average pay levels for those carrying out the same work or work of equal value, and introduces gender pay gap reporting obligations for employers with at least 100 workers. In certain circumstances, an unexplained gender pay gap of at least 5% can also trigger a joint pay assessment. 

The current UK proposals appear much narrower.   It will be interesting to see whether the Government mirrors other aspects of the Directive, particularly by restricting questions about salary history.  Equal pay campaigners cite this as a major factor in perpetuating pay inequality. 

What don't we know yet?

Among the questions still to be answered are:

• Will employers have to advertise a fixed salary or can they use a range?

  The consultation anticipated that ranges might be permissible, but it remains to be seen if this will be implemented and how wide the range might be. 

• What counts as salary information and will employers need to disclose bonus terms? 

  It remains to be seen how bonuses and other variable remuneration will be dealt with. 

• What about recruitment agencies? 

  Employers will need to know where responsibility lies where an agency prepares and publishes the advert.

• How will the rules be enforced? 

  We anticipate that the EHRC or Fair Work Agency would take a role in enforcement.  Alternatively, the consultation proposed a new Equal Pay Regulatory and Enforcement Unit; this may well be taken forward.  However, it's less clear whether candidates would have a right to bring a claim arising from any failure (or whether there would be protection against detriment for raising the issue with the prospective employer). 

• When will the requirement take effect?  

  We are awaiting an implementation date. 

Impact on existing employees

The rationale for this change is that opaque salary practices can permit bias to influence recruitment and salary negotiations, potentially resulting in lower pay for women and other groups.  However, the change is also likely to result in existing staff challenging their own pay - and in some cases could result in equal pay or discrimination claims.   Employers should therefore review their salary structures now, to ensure that when they are forced to put details in the public domain they are able to explain any discrepancies.  

Salary negotiations

Many employers will need to overhaul their approach to salary negotiations, as increased transparency will mean that employers have to explain and evidence their decisions much more frequently.  Basing a negotiation on a candidate's current salary is unlikely to remain a viable option.  This will require both cultural change, for organisations which have shied away from defined salary structures, as well as practical shifts in how recruitment is handled. 

Using salary ranges 

Employers should also think carefully about how they decide where within an advertised range an individual is appointed and how they explain different salaries for similar roles. 

If the employer can point to clearly identified factors such as relevant experience, qualifications, skills or responsibility, the decision is more likely to withstand scrutiny. If the reason is that one candidate was better at negotiating, or that a manager had wide discretion over starting salaries, this is more likely to give rise to discrimination claims as well as potential equal pay issues. 

What should employers do now? 

The Government is encouraging employers to publish salaries now rather than waiting for legislation. Employers considering doing so should think beyond the recruitment advert and consider the wider implications.

1. Review how starting salaries are determined

Identify who decides starting pay and what criteria they use. Managers and recruiters should be working from objective and consistently applied factors rather than instinct, negotiation skills or previous salary alone.

2. Compare advertised salaries with the existing workforce

Before publishing a salary range, check what employees already carrying out the same or comparable roles are being paid. An unexplained difference does not become a problem because it is published, but publication can make the problem visible.

3. Review pay bands and job architecture

Employers with informal or historic salary structures may want to consider whether roles are properly graded and whether salary bands have identifiable minimums, maximums and progression criteria.

4. Test whether differences can be explained

Significant pay differences should be investigated. Employers should understand what objectively explains them and whether that explanation is supported by evidence.

5. Review recruitment documentation

Job advert templates, recruiter instructions, offer approval processes and recruitment agency terms should all be reviewed ahead of implementation.

6. Keep records of pay decisions

Where an employee is appointed above or below the midpoint of a salary range, record why. A short contemporaneous explanation based on objective factors is likely to be much more useful than trying to reconstruct the decision several years later.

The “say what you pay” announcement should also be seen in the context of the Government's equal pay reform agenda, which includes stronger enforcement and broader reform to the law surrounding race and disability pay discrimination.   Employers will need to prepare themselves for remuneration structures to be much more public and much more heavily scrutinised.