Pay & Employment Equity
Definition of Terms
Discrimination
When a person is treated unfairly or less favourably than another person in the same or similar circumstances on a ground prohibited by law. The Human Rights Act 1993 recognises both direct and indirect discrimination.
Direct discrimination occurs where people are disadvantaged because they are treated differently by reason of one or more of the prohibited grounds.
Indirect discrimination occurs where any condition, requirement or practice has the effect of treating a person or group differently on one or more of the prohibited grounds of discrimination; unless good reason for it is established.
Equal pay
Equal pay is generally understood to mean a rate of remuneration for work in which there is no element of differentiation between male and female employees based on sex – where the work of male and female employees is substantially similar and calls for the same or substantially similar degrees of skill, effort and responsibility and is done under similar conditions.
Equity and equality
Equality refers to being equal or the same; equity refers to being just, fair or impartial. In the employment equity context, equity refers to proportionality between differences in relevant characteristics of people and jobs and how they are treated.
Explainable
A rationale for a situation can be articulated to account for why it is happening, so it is properly understood. Considering whether a situation is explainable is a necessary step before an organisation considers whether a situation is justifiable.
Harassment
Harassment is unwanted and unwarranted behaviour that a person finds offensive, intimidating or humiliating and is repeated, or significant enough as a single incident, to have a detrimental effect upon a person’s dignity, safety and well-being.
Various legislation (such as the Human Rights Act 1993, the Employment Relations Act 2000 s103, s108, s109 and s117, the State Sector Act 1988 s56(2) and the Health and Safety in Employment Act 1992) covers differing aspects of harassment.
Some behaviours that may constitute harassment are:
- A generally hostile work atmosphere of repeated put-downs, offensive stereotypes, malicious rumours, or fear tactics such as threatening or bullying
- A general work atmosphere of repeated jokes, teasing, flirting, leering or sleazy "fun"
- An isolated but significant incident, such as a violent attack or sexual assault
- Comments or behaviour that express hostility, contempt or ridicule for people of a particular sex, race, age, etc.
- An employee/employer is offered special treatment in return for sexual favours
Further guidance on behaviours that may contribute to harassment, bullying or discrimination is in the State Service Commission publication Creating a Positive Work Environment.
Job evaluation
A structured process to determine the ´size´ of different jobs within an organisation by examining skills, knowledge, responsibilities and working conditions. Establishing internal relativities between jobs (their ´size´ relative to each other) in an organisation contributes to establishing pay rates and grading structures. The measurement process generally involves a number of factors and results in a numerical score.
Justifiable
Adequate grounds can be provided to establish that a practice is right, reasonable or valid. One important reference point in this Review for considering whether something is justifiable is whether it is lawful and consistent with the Government’s goal to ensure gender is not affecting opportunities or remuneration. Relevant consideration in determining whether any conduct, practice, requirement or condition (including policies or behaviour) is unlawful are:
- Whether the policy, practice or behaviour is based on sex, if so
- Whether the employee(s)or applicant(s) is being disadvantaged, if so
- Whether an exception in the Human Rights Act or Employment Relations Act applies, for example:
- Different treatment based on gender may be a genuine occupational requirement
- Whether measures to address or resolve the disadvantage based on sex would unreasonably disrupt the employer’s business. Relevant considerations would include:
- The effect on capacity to accomplish the organisation’s purpose
- Other employees’ workload or conditions.
More information on discrimination and the Human Rights Act is available at www.hrc.co.nz.
However, some practices and treatments that are within the law may still be found to be unjustifiable.
Market surveys
Once a job evaluation exercise is completed, or when a new job is established in an organisation, use is often made of market surveys to assist the fixing of the pay range for particular jobs. There are databases that are commercially owned (most frequently by companies who sell job evaluation) that record the salaries paid to jobs of a particular numerical ‘size’. This is often described as ‘the market rate’ – the range of pay those particular jobs are attracting across organisations. Often the market will be segmented into particular sectors or industries to make the comparison more relevant. Any biases (gender or otherwise) inherent in the job evaluation systems from which the job size was derived will be reflected in and perpetuated through the market surveys.
Pay and employment equity
Pay equity and employment equity, combined, indicate the outcome of a systematic approach to identifying, and eliminating unjustifiable causes of inequity to provide fair and productive workplaces.
Performance pay
Performance pay is money paid to reward employee performance at work. Sometimes called merit pay, it may take the form of an increase in pay or a bonus one-off payment. It is generally paid on an individual basis. In some organisations, performance may be rewarded through non-cash means. This can include vouchers, gifts or extra leave.
Remuneration
Remuneration is the sum of all direct and indirect cash payments to an employee. It can include cash and non-cash rewards such as base pay, allowances, health insurance, childcare allowance, personal use of a company car, superannuation contributions and bonus payments.
Components of remuneration include:
- Annual base salary – gross per annum amount
- Annual base pay, allowances (higher duties, extra duties, etc.) and overtime payments
- Total remuneration – includes base salary, additional non-cash benefits (employer-subsidised superannuation, reserved car parking, special allowances, and personal use of other employer-provided benefits) that are regularly received, plus any performance pay
- Hourly rate – based on the annual salary
- Average hourly earnings – based on the annual salary, regular taxable allowances, overtime payments
- Typical weekly or fortnightly pay – based on the annual salary.
Work-life balance
Work-life balance is about accommodating the interaction between paid work and other activities, including unpaid work in families and the community, leisure and personal development.
Statistical terms
Deciles and quartiles
Calculations to examine the range in more detail.
Using the example of quartiles, the lower quartile is the values up to the observation that is 25% of the way through the range, the second quartile is the values from 25% to 50%, the third quartile is 50% to 75% of the range and the upper quartile is 75% to 100% of the range.
The decision to divide the data by quartiles or deciles is largely influenced by the number of observations, the size of the range and the level of detail required by the organisation.
If the range of values is small (for example, salaries between $30,000–$70,000), it is often better to use quartiles – this would mean the lower quartile was $30,000–$40,000. If bands that increase by $10,000 are felt to be too broad, and there are sufficient observations, then quintiles or even deciles may be used.
A decile is a 10% slice of the distribution of values.
Mean
The simple average of a number of observations. It is the sum of all the observations divided by the number of observations in the dataset or group.
The mean is a useful tool for analysis when the range of data is fairly evenly distributed – there are about the same number in the top and bottom quartile.
Means can obscure the range of values within the data set. For example, one salary value of over $100,000 can substantially lift the average of a set of salary figures that are mainly around the $30,000-$40,000 range. It is always useful to examine the range of the data. Clustering data into quartiles, quintiles or deciles can offer a clearer picture. It is then possible to examine the gender occupancy of the upper and lower ends.
Median
The central value in a set of data that has been arranged in order of size. For example, where the salaries have been listed in ascending order, the median of the salaries of 41 people is the 21st value. Where there is an even number of salaries (40) the median is the average of the value 20 and 21. The salaries of some people in these datasets may be the same (for example, there may be eight people on $36,000 and ten on $45,000). These are counted as eight or ten values, not one.
The median is a more useful measure when the data is not evenly distributed – as with salaries in organisations where most people will be in the lower to middle pay groups and fewer will be at the top.
Mode
The score that occurs most frequently.
Range
A measure of variability within the group or dataset. The range is calculated by subtracting the lowest observation from the highest. For example, when the top salary in an organisation is $120,000 and the lowest is $20,000 the range is $100,000.
Regression analysis
A method for determining the association between a dependent variable and one or more independent variables.