Three-test approach
QCG has developed a three-test approach to equal pay audits. With most equal pay audits concentrating on comparisons of average pay of groups, there are potential risks emerging from the distribution of pay in each group, outliers and other anomalies which are often ignored.
The QCG approach addresses these issues through 3 tests, adding more rigour and reliability to the findings from the audit.
Test 1 – Analysis of average FTE base salaries
The first test involves performing comparative analyses of average pay rates in line with standard Equality and Human Rights Commission guidance and best practice.
The test produces evidence of employee groups whose average pay is different. From this we are able to investigate whether there are any root causes for this (e.g. time in role, performance) and whether or not these constitute valid reasons to justify such differences.
Values in red represent gaps greater than 5% and the instances we would proceed to investigate, as per the guidelines from the Equality and Human Rights Commission.
Test 2 – Dispersion of FTE base salaries
The second test involves a visual assessment intended to identify outliers that merit further investigation. We do this by producing dispersion charts with employee data points being colour coded according to the characteristic we are testing pay equality for.
Again, we investigate the reasons behind the salary position of outliers in order to establish whether or not those factors represent a concern.
Test 3 – Interquartile Ranges
The third and final test involves a statistical analysis of the distribution of pay for different employee groups. This will add rigour to equality assessments by allowing us to establish whether the average position of pay is a result of concentration around a midpoint or aggregation of disperse points.
In the latter scenario, this could raise points for further investigation that potentially fall through the gaps when conducting equal pay assessments limited to the standard recommended approach.
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