Author: Sarah Jefferys
When we talk about pay equity, we're not just referring to the numbers on a payslip. The policies and processes that sit behind it, are all part of the picture.
Pay equity means compensating employees in a fair and consistent manner for their work, regardless of gender, race, ethnicity, age or any other characteristics. Pay should be based on their role, responsibilities, performance and experience.
To be able to offer pay equity, employers need regular audits, clear job evaluation methods and clear communication about pay structures.
In today's workplace, pay equity can be an overlooked element of an organisation's mental health strategy, either sitting behind mental health initiatives, flexible working and employee assistance programmes, or not considered at all. For fairness, transparency and recognition to be seen in an organisation, prioritising equitable pay must be a strategic priority.
The hidden toll of pay inequity and its psychological impact
Unfair pay doesn't just affect bank balances. It affects overall health and wellbeing:
- Financial stress: When employees struggle to meet financial obligations, it can lead to chronic stress and anxiety
- Erosion of trust: Perceived unfairness damages confidence in leadership and the organisation
- Loss of motivation: Feeling undervalued can chip away at self-esteem and engagement
A relevant example can be found in an article by Brook Choulet for Forbes published in December 2024: How Pay Inequity Causes Stress for Women in Sports1. The article explains that "Not only is the salary often much lower than their male athlete counterparts, but female athletes also experience more inconsistency in their income as well as more unpredictable sponsorships."
According to the survey featured in the article, over 40% of female athletes described their earnings as inconsistent, with many requiring second jobs to meet the demands of their monthly bills.
Brittni Mason, a five-time Paralympic medalist and world record holder, shared "Even with my accolades, I've had to rely on sponsors or side jobs to survive and train. The disparities in sponsorships, prize money, and funding for women's sports are glaring. It's something I'm passionate about addressing to ensure future generations face fewer barriers."
Equitable pay as a part of wellbeing
When pay is fair and transparent, it becomes a protective factor for mental health.
Here's how:
Financial stability reduces stress
The Big Mental Health Report 2024 by Mind UK highlights that people with mental health problems earn nearly £10,000 less per year than those without2. Equitable pay helps close this gap and reduce financial strain.
Feeling valued though fair compensation enhances self-worth and engagement, and equitable pay also supports other wellbeing strategies like flexible working, career development and an inclusive culture.
The value of transparency and fluid communication
Transparency doesn't mean publishing everyone's individual salary. It means being clear about how pay decisions are made, what progression looks like and how roles are benchmarked.
Pay transparency (even partial) can reduce speculation and mistrust. Open conversations about pay philosophy and progression paths support mental clarity and reduce anxiety.
The Reward Management Survey from CIPD outlines that "Managers play a crucial role here. Equipping them to have informed and empathetic conversations about pay can transform how employees experience reward — not just as a transaction, but as a relationship3."
What employers can do
- Conduct regular pay equity audits.
- Train managers to have empathetic and informed pay conversations.
- Integrate wellbeing into reward strategies — not just salary, but benefits, flexibility and recognition.
How we can help
Equitable pay is more than just a financial issue. It's a mental health issue. When employees feel rewarded, they're more likely to feel secure, valued and engaged. In a world where wellbeing is business-critical, fair pay isn't just the right thing to do — it's the smart thing to do.
At Gallagher, we support organisations in embedding pay equity into their reward strategies. Through robust frameworks and benchmarking, and tailored consultancy, we help clients identify disparities, build transparent frameworks, and align pay practices with their values. Because when pay is fair, people thrive — and so does your organisation.
