How to conduct a pay equity audit
A pay equity audit helps you identify and address gender pay gaps in your organisation. Under Australian law, employers must provide equal remuneration for work of equal or comparable value. This guide shows you how to conduct a systematic review of your pay practices.
Written by
Georgia Morgan
General information only – not legal advice
This guide provides general information about conducting pay equity audits for Australian businesses. It does not constitute legal, HR, or professional advice and should not be relied on as a substitute for advice specific to your business, workforce, or circumstances.
What is a pay equity audit?
A pay equity audit is a systematic review of your organisation's pay practices to identify and address any gender pay gaps. Unlike a payroll compliance audit which focuses on legal compliance with payroll obligations, a pay equity audit specifically examines whether people of all genders receive equal pay for work of equal or comparable value.
Under the Fair Work Act 2009, the Fair Work Commission can require employers to ensure everyone receives equal remuneration for work of equal or comparable value. In Victoria, the Equal Opportunity Act 2010 protects people of all genders from discrimination in employment.
The Workplace Gender Equality Agency (WGEA) publishes gender pay gap data for employers with 100 or more employees. Conducting regular pay audits helps all employers, regardless of size, demonstrate commitment to pay equity and comply with equal pay obligations.
Sample pay equity audit framework
Here's what a typical pay equity audit framework looks like with the key analysis areas highlighted.
A typical pay equity audit framework includes:
- Scope — Goals, team, timeframe
- Work levels — Comparable work groupings
- Remuneration — All forms of pay analysed
- Demographics — Gender, age, background patterns
- Action plan — Steps to address gaps
Why conduct a pay equity audit?
Legal compliance, fairness, and good business practice all point to the importance of regular pay audits.
Legal compliance
Fair Work Act 2009 requires equal remuneration for work of equal or comparable value. State legislation also prohibits gender discrimination.
Fairness and equity
Everyone deserves equal pay for work of equal value, regardless of gender, age, or background. Audits ensure fairness.
Business benefits
Fair pay improves employee retention, attraction, and engagement. It's good for your reputation and bottom line.
Understanding the gender pay gap formula
Gender pay gap = (Average male remuneration - Average female remuneration) / Average male remuneration × 100. For example: if men earn $80,000 on average and women earn $72,000, the gap is (80,000 - 72,000) / 80,000 × 100 = 10%. This means women earn 10% less than men on average.
Pay equity audit preparation checklist
Complete these items before starting your audit to ensure a thorough and accurate review.
Audit goals defined
EssentialClear objectives for what the audit will achieve
Team assembled
EssentialHR, finance, legal representatives identified
Scope determined
EssentialWhich roles and employees will be included
Pay levels defined
EssentialComparable work groupings established
Job descriptions reviewed
EssentialCurrent role requirements and responsibilities
Remuneration data collected
EssentialAll forms of pay including benefits
Demographic data gathered
EssentialGender, age, background (where disclosed)
Analysis methodology agreed
How gaps will be identified and measured
Comparison framework ready
EssentialSpreadsheet or software for analysis
Action plan template prepared
Format for documenting findings and actions
Three ways to conduct pay equity audits
Each method has trade-offs. Here's how they compare.
Manual process
Paper records and calculator. Extremely time-consuming and error-prone for complex pay analysis.
Best for: Very small teams (1-5 staff)
Use spreadsheets
Excel or Google Sheets. More structured but still requires manual data entry and formula setup.
Best for: Small teams (5-20 staff)
Automated data collection, analysis, and reporting. Professional and efficient.
Best for: Any business serious about pay equity
How to conduct a pay equity audit
Follow these 6 steps to conduct a comprehensive pay equity audit and identify any gender pay gaps.
Plan and define scope
Set clear goals for the audit, assemble your team, and determine what will be reviewed.
Key actions:
- Set specific goals: identify pay gaps, support compliance with equal pay legislation, or review pay structures
- Assemble a team with representatives from HR, finance, and legal if available
- Determine timeframe for the audit (typically 1-3 months for initial audit)
- Decide which employees and roles will be included in the scope
Determine comparable work
Group roles into pay levels based on comparable work requirements using multiple factors.
Key actions:
- Leadership: Strategic contribution to the organisation
- Knowledge and skills: Technical or specialist know-how required
- People management: Whether role involves supervising others
- Service: Level of care or service to customers/clients
- Complexity: Decision-making complexity, stakeholder management, financial responsibility
- Physical effort: Physical tasks leading to tiredness or strain
- Working conditions: Exposure to stress, weather, noise, hazards, etc.
- Most small businesses will have 3-6 distinct pay levels
Gather data
Collect all relevant employment, remuneration, and demographic data for analysis.
Key actions:
- Role-specific: pay level, employment type (full-time/part-time/casual), qualifications, years of experience
- Remuneration: base salary, superannuation, benefits, leave entitlements, allowances, bonuses
- Demographic: gender, age, cultural background, disability status (where disclosed)
- Time and attendance records for hourly workers
- Ensure data is anonymised appropriately for initial analysis
Analyse the data
Review pay by level, employment type, and demographic factors to identify any gaps or patterns.
Key actions:
- Are men, women, and gender-diverse people receiving the same base salary in each level?
- Are they receiving the same total remuneration (including benefits, bonuses, allowances)?
- Is there a gender difference in the number of people at each level?
- Is there a gender difference between employment types (FT/PT/casual) at each level?
- Perform intersectional analysis: look at age, cultural background, disability
- Calculate gender pay gap using: (Average male remuneration - Average female remuneration) / Average male remuneration × 100
Assess and address
Identify possible explanations for gaps and create an action plan to address inequalities.
Key actions:
- Review hiring and promotion processes for potential bias
- Examine bonus and performance pay allocation
- Check parental leave policies and return-to-work support
- Review award interpretation and pay rates
- Assess flexible work arrangements and their impact on career progression
- Identify training and development opportunities
Monitor ongoing
Document findings, communicate actions, and establish regular monitoring processes.
Key actions:
- Document all findings and action plans
- Communicate results appropriately to stakeholders
- Set targets and timelines for addressing identified gaps
- Establish regular pay review cycles (annually or bi-annually)
- Monitor impact of changes implemented
- Report progress to leadership and board
Pay equity audit tips
Follow these principles for audits that genuinely identify and address pay inequity.
Compare like work
Group roles by work value and requirements, not job titles or departments.
Include all remuneration
Look at total compensation: salary, bonuses, benefits, super, allowances, leave.
Intersectional lens
Analyse by gender plus age, cultural background, and disability for full picture.
Involve stakeholders
Include HR, finance, legal, and employee representatives in the process.
Document everything
Keep detailed records of methodology, findings, and actions taken.
Regular monitoring
Conduct audits annually or bi-annually and track progress over time.
Factors for determining comparable work
When grouping roles into pay levels, consider these factors to determine if work is of equal or comparable value:
Conduct pay audits with RosterElf HR hub
What takes days manually can be done in hours with integrated payroll and HR software.
Automated data collection
Pull employee, role, and remuneration data directly from payroll and HR systems.
Real-time gap analysis
Automated calculations show gender pay gaps by level, role type, and demographic factors.
Historical tracking
Track pay equity trends over time and monitor the impact of your action plans.
One-click reporting
Generate comprehensive audit reports for leadership, board, or WGEA reporting.
No credit card required
Feature comparison
See exactly how each pay audit method stacks up across key features.
Data collection
Pay grouping
Gap calculation
Historical tracking
Demographic analysis
Regular monitoring
Compliance reporting
Accuracy
| Feature | Manual | Spreadsheet | HR software |
|---|---|---|---|
| Data collection | 5-10 hours | 3-5 hours | 1-2 hours |
| Pay grouping | Manual sorting | Spreadsheet | Automated |
| Gap calculation | Calculator | Excel formulas | Real-time reports |
| Historical tracking | Filing cabinet | Spreadsheet history | Centralised records |
| Demographic analysis | Manual charts | Pivot tables | Interactive dashboards |
| Regular monitoring | Ad hoc | Manual updates | Automated alerts |
| Compliance reporting | Manual | Semi-manual | One-click reports |
| Accuracy | Error-prone | Better | Highly accurate |
Common pay audit mistakes
Learn from others' errors. These mistakes lead to incomplete audits and missed pay gaps.
Comparing job titles instead of work value
Consequence: Miss pay gaps between roles with different titles but similar work requirements
Solution: Focus on the value and requirements of work, not job titles. Use structured job descriptions
Only looking at base salary
Consequence: Overlook significant gaps in total remuneration including bonuses, benefits, and allowances
Solution: Include all forms of remuneration in your analysis. Track with payroll integration
Ignoring part-time and casual workers
Consequence: Exclude workers who are disproportionately women, missing significant gender pay gaps
Solution: Include all employment types, adjusting for hours worked. Use rostering data
Not doing intersectional analysis
Consequence: Fail to identify compounding disadvantage for women from diverse backgrounds
Solution: Analyse by gender plus age, cultural background, and disability. Track with HR records
One-off audit with no follow-up
Consequence: Pay gaps re-emerge over time without ongoing monitoring and action
Solution: Establish regular audit cycles and track progress. Monitor with payroll analytics
Frequently asked questions about conducting pay equity audits
- A pay equity audit is a systematic review of your organisation's pay practices to identify and address any gender pay gaps. It involves comparing remuneration for employees performing work of equal or comparable value to support compliance with equal pay legislation and identify areas for improvement.
- The gender pay gap is calculated as: (Average male remuneration - Average female remuneration) / Average male remuneration × 100. For example, if the average male salary is $80,000 and the average female salary is $72,000, the gender pay gap is 10%. This means women earn 10% less than men on average.
- Equal pay means paying employees the same rate for the same or substantially similar work. The gender pay gap is the difference in average earnings between men and women across an organisation or industry. You can have equal pay for equal work but still have a gender pay gap if more men are in senior, higher-paid roles.
- Include all forms of remuneration: base salary or wages, bonuses and performance pay, allowances (car, phone, meal), overtime and penalty rates, superannuation contributions, leave loading, shares or stock options, and other benefits like company cars or health insurance. Total remuneration provides the full picture.
- Work is of equal or comparable value when roles require similar levels of skill, responsibility, effort, and are performed under similar conditions. Consider factors like leadership responsibility, technical knowledge, people management, service delivery, decision-making complexity, physical effort, and working conditions. Job titles alone are not sufficient.
Regulatory sources
This guide is aligned with official Australian workplace regulations on pay equity and discrimination.
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