Equal Remuneration Act
What is the Equal Remuneration Act?
The Equal Remuneration Act, 1976 is an Indian law that requires employers to pay equal remuneration to men and women for the same work or work of a similar nature, and prohibits discrimination on grounds of sex in recruitment and service conditions. It gave effect to the constitutional principle of equal pay for equal work. The Equal Remuneration Act has now been merged into the Code on Wages, 2019, which carries forward the prohibition of gender-based pay discrimination in a wider framework, though the older name remains common in policies, contracts and discussions.
For US companies hiring in India, the Equal Remuneration Act and its successor provisions matter at every stage: designing salary bands, making offers, running appraisals and responding to pay complaints. Equal pay is also a growing expectation among employees, investors and clients.
Why the Equal Remuneration Act Matters
- Protects employees from pay discrimination based on gender. - Creates legal duties around recruitment and promotion. - Exposes employers to penalties and claims if ignored. - Builds trust and fairness in compensation decisions. - Supports diversity and inclusion goals.
Key Principles of the Equal Remuneration Act
The law requires equal pay for the same work or work of a similar nature, which means work that requires the same skill, effort and responsibility under similar working conditions. It forbids employers from reducing the pay of existing employees to achieve equality. It also bars gender discrimination in recruitment, except where the law permits specific treatment.
What Counts as Remuneration Under the Equal Remuneration Act
Remuneration includes basic wage or salary and any additional emoluments payable in cash or kind, such as allowances and bonus. Equal pay therefore looks at the total package, not only the base figure. Differences in allowances, variable pay or benefits for similar roles can create risk if they track gender.
Same Work or Work of Similar Nature
Authorities compare roles by the skill, effort and responsibility they require. Two engineers doing similar tasks at the same level should receive similar pay unless a valid, gender-neutral factor explains a difference, such as experience, performance, certification or location. Document the reasons for differences.
Legitimate Factors for Pay Differences
Acceptable factors include seniority, relevant experience, performance ratings, qualifications, market rates for scarce skills, geographic cost differences and shift or role-specific allowances. These must be applied consistently and without bias. Vague or subjective reasons are risky.
Recruitment and Promotion Under the Equal Remuneration Act
The prohibition covers hiring and service conditions, not only pay. Job advertisements should not exclude one gender without lawful grounds. Interview questions, promotion criteria and access to training should be gender neutral. Track hiring and promotion data by gender to identify patterns.
Pay Equity Audits Under the Equal Remuneration Act
An internal audit compares pay for similar roles, adjusting for legitimate factors, to find unexplained gaps. Steps include grouping roles by level and function, collecting pay data, analysing differences, investigating outliers and correcting gaps. Run audits annually or after hiring waves and salary reviews.
Records and Registers for the Equal Remuneration Act
Employers are expected to maintain records of wages and employees to demonstrate compliance, and inspectors can require registers. Keep salary decisions, band documentation and justification notes. These records are your defence if a complaint arises.
Handling Complaints Under the Equal Remuneration Act
Provide a clear channel for employees to raise pay concerns, investigate fairly and fix proven gaps promptly. Link the process to the grievance policy. Protect complainants from retaliation, as victimisation is a serious problem on its own.
Penalties Under the Equal Remuneration Act
Violations can attract fines, imprisonment in some cases and orders to pay the difference. The consequences go beyond fines: reputation damage and employee attrition can be more costly.
Common Equal Remuneration Act Mistakes
Frequent errors include relying on negotiated starting pay without review, paying higher joining bonuses to men or women inconsistently, ignoring gaps that widen over time and keeping no records of why pay differs.
Example of a Pay Equity Review
A company has twelve software engineers at the same level in Pune. A review finds that the average pay of women in the group is eight percent below the average pay of men, and that the gap comes mostly from different starting salaries negotiated at hiring. After checking experience, skills and performance, the company decides that five percent of the gap cannot be explained by gender-neutral factors. It adjusts the salaries of affected employees in the next review cycle and updates its offer process to use bands, which keeps the Equal Remuneration Act principle intact for future hires.
Salary Bands and the Equal Remuneration Act
Published bands reduce the chance that negotiation skills create unexplained gaps. Define a minimum, midpoint and maximum for each level, and require written justification for offers above the midpoint. Some employers share bands with employees, which builds trust. Even if bands are internal, using them consistently supports compliance and morale. Review them each year against market data so that they stay fair and competitive.
Starting Pay and Past Salary
Basing offers on previous salary can carry forward historic inequities. Women and other groups may have been paid less in earlier roles, so anchoring on past pay can repeat the gap. A better approach is to set offers by the value of the role and the candidate’s skills, and use the band as the guide.
Maternity, Career Breaks and Pay
Employees returning from maternity leave or career breaks should not face lower pay solely for that reason. The Maternity Benefit Act protects against dismissal and wage loss during the leave period. Managers should review pay, bonus and promotion decisions to make sure that leave does not become a hidden penalty.
Reporting and Governance for the Equal Remuneration Act
Share a short annual summary with senior leaders: headcount by gender and level, average pay ratios, actions taken and remaining gaps. Assign an owner for pay equity, and review the results with HR and finance. Transparency within leadership keeps the Equal Remuneration Act obligations visible and encourages steady improvement.
How kaam.work Supports Equal Remuneration Act Compliance
kaam.work is an Employer of Record that employs your India team and runs payroll. We help you build gender-neutral salary bands, review offers for consistency and run pay equity checks across similar roles, in line with the Equal Remuneration Act and its successor provisions.
We keep payroll registers and decision records organised, advise on fair responses to pay concerns and support compliant job descriptions and promotion processes. With kaam.work, equal pay becomes a built-in part of your compensation approach, not an afterthought.
Frequently asked questions
- What does the Equal Remuneration Act require?
- Equal pay for men and women doing the same or similar work, and no gender discrimination in recruitment.
- Is the Act still in force?
- Its provisions now sit within the Code on Wages,
- Can pay differ for similar roles?
- Yes, if based on valid, gender-neutral factors such as experience and performance.
- Should we run pay equity audits?
- Yes, annually or after major hiring and review cycles.
- Can an Employer of Record help?
- Yes. kaam.work builds fair bands and reviews pay.
