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Adopt a systematic approach to meet equal pay requirements in Hong Kong

Published on Saturday, 13 Aug 2016

The Background

According to the World Economic Forum’s 2015 Global Gender Gap report, it will take 118 years until the global pay gap between men and women is closed. Perhaps in response to such statistics, a number of multinational corporations, including Facebook and Microsoft, have announced that they pay men and women “equally”, and governments in various jurisdictions have unveiled new initiatives to eliminate sex discrimination in relation to pay. These include regulations in the UK which will force employers to publish data about their gender pay gap, and an initiative in the US called the White House Equal Pay Pledge whereby companies commit to conducting an annual gender pay analysis.

Figures published by the Census and Statistics Department show that, in 2014, median male monthly employment earnings were HK$15,000 in Hong Kong, while median female monthly employment earnings were HK$11,000.

Given what appears to be quite a significant difference in pay between the genders, does Hong Kong law recognise the concept of equal pay between men and women?

Hong Kong does not have legislation that explicitly provides for equal pay in the workplace. However, if a woman is paid less than a man for doing the same job – or for doing a different job of comparable value – and the difference in pay is based on a prohibited ground, such as sex, this might constitute unlawful discrimination under one of the four discrimination ordinances. These ordinances – the Sex Discrimination Ordinance, the Race Discrimination Ordinance, the Family Status Discrimination Ordinance and the Disability Discrimination Ordinance – prohibit discrimination on the grounds of sex, pregnancy, family status, marital status, race and disability. In the context of pay, however, the focus tends to be on gender and the pay differential between men and women.


The Implications

The simple fact that a female employee is paid less than her male colleague who performs the same role does not automatically mean that she is the victim of pay discrimination by her employer. The burden of proving that a pay differential is not discriminatory rests with the employer. This means that if an employer is unable to show that a difference in pay is due to a valid reason other than gender, an inference of discrimination may be drawn in relation to the pay disparity.

Of course, there may be a number of reasons for differences in pay which are unrelated to gender. The most common reasons are length of service, performance, experience, qualifications and market factors, such as response to a skills shortage. It is important, however, to ensure that what appears to be a neutral reason for a pay differential is not indirectly influenced by gender.

For example, research by Linda Babcock, a professor at Carnegie Mellon University in the US and co-author of the book Women Don’t Ask: Negotiation and the Gender Divide, has shown that men are more likely to negotiate their starting salary than women, with the upshot that male starting salaries tend to be higher.  In addition, women’s starting salaries can suffer from anchoring bias, where a manager takes into account the candidate’s current salary and thereby perpetuates an existing gender bias.

Since an individual’s starting salary can have a long-term impact on pay equality, it may be best for new employers to disregard current salary – and any attempts to negotiate – and instead pay for what the job is worth.

Many employers use salary bands, scales or grades when determining pay progression during employment. Discrimination risk can arise in these systems when decisions about pay progression are discretionary. Employers should monitor the distribution of male and female employees within each pay grade; if women are largely clustered at the bottom end of a band and men at the top, this may indicate a potential problem.

To minimise risk of discrimination, employers should use guidelines to ensure pay progression is determined objectively.


The Advice

The Equal Opportunities Commission is a long-time advocate of equal pay and has published detailed guidance for employers on achieving pay equality, including an equal pay self-audit kit.

An equal pay audit involves comparing the pay of men and women who carry out equal work to identify and investigate difference. If a pay gap cannot be explained, the employer should rectify it. They should also conduct periodic audits to review pay practices.

HR practitioners should adopt a systematic approach to determining pay that is free from gender bias and applied consistently to all staff.

Pay policies which are transparent and well understood by staff should be implemented; such policies are much less likely to be challenged. Do bear in mind that, although discretionary pay systems can be an important tool for rewarding employees, they are particularly prone to bias and at risk of challenge by employees who feel unfairly treated.

Document the rationale for pay decisions in writing and retain a record on file. Consider making an express commitment to pay equality between men and women via an equal pay statement or policy.

Consider introducing unconscious bias training for managers responsible for pay decisions, and endeavour to make an express commitment to pay equality for men and women via an equal pay statement or policy.

Finally, monitor pay outcomes across all employee groups and take corrective action whenever pay disparity is identified.

This article appeared in the Classified Post print edition as Pre-empt legal pitfalls by ensuring equal pay.

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