What does pay mean?

A broad definition of pay in the Equality Act

Both the Equality Act and European Union law (Article 157 in TFEU) employ a broad definition of 'pay'. Pay means any financial benefits that employees receive from the employer either directly or indirectly in respect of their employment. Pay is compensation for work that has already been carried out, but it can also be a future incentive, as long as it relates to the work directly or indirectly.

Pay includes the ordinary basic or minimum wage or salary and various supplementary allowances. The remuneration systems include many different types of supplementary allowances, such as personal allowances, performance-based bonuses and allowances based on working hours. Sick pay, holiday pay and pay during parental leave are included in the definition of pay in the Equality Act. Various fringe benefits such as company mobile phones, meals, cars and housing are also included in the definition of pay.

In the case-law of the European Court of Justice pay also includes any compensation that the employer pays or is ordered to pay when terminating a contract of employment. Supplementary pensions can also be considered pay. According to the EU Court of Justice the pension benefits included in the pension system for Finnish civil servants is also counted as pay.

Benefits paid out based on collective agreements or public sector collective agreements, as well as voluntary benefits paid out by the employer, are all included in the pay.

When the pay is made up of various salary components all components must be of a non-discriminatory nature. Therefore comparisons of pay are not based on the total salary. Whether or not the pay is discriminatory is also judged separately based on the various components of the monetary salary, i.e. the basic salary and all supplementary allowances.

The regulation in the Equality Act which prohibits pay discrimination does not only apply to pay, but also to all other terms of employment.