Rethinking Indian law on equal pay: towards gender pay equality in workplace

Veena Gopalakrishnan

Trilegal, Bengaluru, Karnataka

Veena.Gopalakrishnan@Trilegal.com

Archita Mohapatra

Trilegal, Bengaluru, Karnataka

Archita.mohapatra@Trilegal.com

Sandhya Swaminathan

Trilegal, Bengaluru, Karnataka

Introduction

Pay inequality continues to remain a pervasive issue despite efforts made by India to address gender pay gap over the years, and despite having a specific legislation on the subject since 1976. According to a survey published by DBS Bank India (in collaboration with CRISIL), titled ‘Women and Finance’,[1] the perceived gender pay gap on a pan-India level stands at 23 per cent among salaried women in metropolitan cities. Furthermore, concepts of unpaid caregiving and household work cannot be ignored in the Indian context. A study conducted by the Indian Institute for Population Sciences (IIPS) and Tata Institute of Social Sciences (TISS), Mumbai in 2024 has shown that women spend 301 minutes on unpaid domestic work, in comparison to men who spend 98 minutes on the same. Overall, India ranks at 127 out of 148 counties in terms of gender pay parity, according to the Global Gender Gap Report 2023 published by the World Economic Forum.[2]

India has made legislative strides to address pay disparity and enhance women’s workforce participation through laws like the Minimum Wages Act 1948, the Equal Remuneration Act 1976 (‘Equal Remuneration Act’), now subsumed under the Code on Wages 2019 (‘Wage Code') and the Maternity Benefit Act 2017. The Equal Remuneration Act imposes a duty upon employers to pay equal remuneration to men and women workers performing the same work or work of a similar nature. Furthermore, employers are prohibited from discriminating against women for the same work or work of a similar nature. Notably, India has also enacted the Transgender Persons (Protection of Rights) Act 2019, which prohibits discrimination against transgender persons in matters of employment. This article analyses the current Indian legal framework on equal pay and explores the need to reconsider the existing law and align it with international standards advocating for a broader concept of equal pay for equal value of work.

Limitations of the Equal Remuneration Act

Gender-based discrimination and bias in workplaces, concentration of women in low-paying industry sectors and under-representation of women in leadership positions in high-paying industries are some of the key contributors of gender pay disparity in India. While the Equal Remuneration Act represents a crucial step towards gender pay equality, its provisions have limitations that hinder its effectiveness in addressing the complexities of pay disparity. The phrase ‘same work or work of similar nature’ has been defined under the Equal Remuneration Act as below:

‘same work or work of a similar nature means work in respect of which the skill, effort and responsibility required are the same, when performed under similar working conditions, by a man or a woman and the differences, if any, between the skill, effort and responsibility required of a man and those required of a woman are not of practical importance in relation to the terms and conditions of employment’.

The definition of 'same work or work of similar nature’ under the Equal Remuneration Act implies that work performed by both genders should be the same or similar in nature, in order to be compared. This narrow interpretation fails to account for the intrinsic value of work performed and perpetuates gender disparities. Accordingly, the Equal Remuneration Act requires that two jobs of the same or similar nature should be remunerated equally but two jobs of different natures which may have equal value cannot be compared. Moreover, the Equal Remuneration Act does not address the undervaluation of female-dominated jobs, such as caregiving and domestic labour, which are often excluded from the scope of equal pay protections. As a result, women continue to earn lower wages than their male counterparts and get limited economic opportunities, exacerbating gender inequality in the workforce.

Notably, section 16 of the Equal Remuneration Act also allows the government to declare that an employer would not be in contravention of the Equal Remuneration Act if it is satisfied that a difference in pay was based on a factor other than sex, giving rise to further ambiguity and lack of transparency in matters of pay for same or similar work. The Wage Code, which is set to replace the Equal Remuneration Act once notified, while more gender inclusive, echoes the same principle of ‘same work or work of similar nature’, as under the Equal Remuneration Act.

Understanding equal pay for equal value of work

The Equal Remuneration Convention of 1951, adopted by the International Labour Organisation and ratified by India in 1958, sets out the principle of 'equal remuneration for work of equal value’. The concept of equal remuneration for work of equal value is a broader concept as compared to equal pay for equal work. It encompasses situations when men and women are engaged in different work, which helps in redressing undervaluation of those jobs which are primarily performed by women. It implies that men and women may perform work which are different in content, involve different responsibilities, require varying skill-sets and perform jobs under different conditions, however, as long as such work is of equal value, both are to be remunerated equally. While equal pay for equal work limits its application of the equal pay principle to two same or similar jobs, the concept of work of equal value covers situations of two different jobs performed by men and women.

Iceland, a country which consistently ranks in the top positions in the Global Gender Gap Index has granted statutory recognition to the principle of equal pay for equal value of work through its Gender Equality Act 10/2008, which requires employers to prove that they pay men and women equally – not just for a similar job, but for a job of equal value. The European Union (EU) also recently adopted the ‘Pay Transparency Directive’ in June 2023,[3] which echoes the concept of ‘equal pay for equal work or work of equal value’. The Pay Transparency Directive imposes reporting obligations on employers to enhance pay transparency within organisations, thereby empowering employees to advocate for equal pay. By providing employees with access to information regarding pay disparities and promoting accountability among employers, pay transparency measures facilitate the enforcement of the equal pay principle and contribute towards closing the gender pay gap.

Rethinking the concept of equal pay in India

The principle of equal work restricts the application of the equal pay principle to work undertaken by women and men in the same area of activity which would have same or similar nature of jobs. Accordingly, the equal work principle cannot be invoked in a situation where a woman is performing a female-dominated job (having no male comparator) which is already undervalued considering the nature of the job, to compare its value with another job which may not be similar but might generate equal value. To that extent, it is quite difficult to objectively evaluate or assess the correct value of such female-dominated jobs and they continue to remain undervalued and underpaid. Though the existing legal framework prevents any instances of direct discrimination from taking place, it fails to tackle occurrences of indirect discrimination which is a major reason behind gender discrimination in present circumstances in India.

In order to effectively address the gender pay disparity in India, it is imperative to adopt principles of pay equity, as advocated by the EU’s Pay Transparency Directive and Iceland’s Gender Equality Act, among other countries. Revising the definition of ‘same work or work of similar nature’ under the Equal Remuneration Act and Wage Code, to include consideration of work of equal value would enable the objective evaluation of the value of jobs traditionally held by women and mitigate any undervaluation of female-dominated roles. Since the concept of work of equal value facilitates comparisons between two different jobs performed by different genders, it is not necessary for two jobs to be the same or similar in order to be compared which is generally a requirement for invoking the principle of equal work. The method of comparing two different jobs can be based on gender-neutral and non-discriminatory objective criteria, taking account of primarily four factors, namely: qualifications, skills, efforts and working conditions.  

Additionally, implementing pay transparency measures, such as mandatory salary disclosures and reporting obligations for employers, would enhance accountability and empower employees to challenge instances of unequal pay. By aligning Indian equal pay legislation with international standards and best practices, India can take a significant step towards achieving gender pay equality in the workplace. It would help in providing a clear and fair method to assist in determining pay irrespective of the employee’s gender. Furthermore, the incorporation of workplace policies for gender-neutral hiring, transparent pay-scale implementation, and mandatory reporting obligations with respect to pay structures can go a long way in increasing women participation, and ensure gender pay equality in workplaces in India.

Conclusion

In light of the above, the understanding and application of the concept of ‘equal pay for work of equal value’ is important in order to tackle the issue of the gender pay gap and achieve pay equality. This concept is more efficient than ‘equal pay for equal work’ in addressing gender-based discrimination and promoting pay equality, since men and women often perform different jobs and under different working conditions and circumstances.