Pay gap

Organisations with 250 or more employees must be ready to publish their gender pay gap data as the second deadline of 4 April 2019 approaches (30 March for public sector).

The gender pay is the difference between average hourly earnings for men and women. According to the Office for National Statistics (ONS), men earned 18.4% more than women in April 2017. The UK continues to have one of the widest overall gender pay gaps in Europe. Whilst last year’s gender pay gap data was eye-opening, it is this year’s data which will be fascinating in showing whether larger employers have made an effort to lessen the gap compared to their figures last year.

With the deadline around six weeks away, only around 10% of employers have reported their figures so far. Initial figures show that the pay gap has in fact widened since last year which is causing the effectiveness of the reporting rules to be called into question. These figures do not seem to correlate with the recent survey conducted by the Confederation of British Industry (CBI) showing that 93% of businesses are taking action to reduce the gender pay gap compared with 62% who were asked in 2017. However, closing the gender pay gap will not happen overnight. The Government Equalities Office (GEO) have said that ‘closing the gender pay gap is not a quick fix, and employers may take time to see their gap close as they implement long term action plans’.

In a survey by the GEO, on the subject of the level of understanding gender pay gap reporting, 82% of employers who responded felt they had a good understanding of reporting rules, with 16% reporting a reasonable understanding. Earlier this year, the government published a guide to help employers understand gender pay gap. The guide highlights the most common practices which result in a gender pay gap. These include a lack of support for those who work part-time, poor management of the rate at which women leave an organisation and the general recruitment of women into lower-paid roles.

The downside for those who are kicking against the straps will be invasive scrutiny by the EHRC (the Commission).

Females in senior positions

Gender pay gaps are often largest in the finance sector. RBS have reported an average pay gap of 36% whilst Lloyds Banking Group reported a gap of 32%. Both banks have pledged to support women into more senior positions.

Last year, it was reported that there were more people called David or Steve who head up FTSE 100 companies then there are women or ethnic minorities, highlighting the dominance of men in the most senior positions in business.

The gender pay gap tends to open, rather than close, once a women becomes a mother. The Commons Women and Equalities Committee opined that this was partly because women ‘take the majority of responsibility for childcare’ and are more likely to put their careers on hold. MPs have previously called for parental leave rights for fathers to be enhanced to balance out the responsibility for childcare in the family unit. That view is probably too narrow in terms of finding a solution but it is a start.

Where to next?

There has been a lot of noise that the reporting rules do not go far enough to encourage organisations to close their gender pay gaps. The Business, Energy and Industrial Strategy (BEIS) Committee would like to see the reporting obligations extended so as to include a requirement that applicable organisations publish an action plan on how they propose to tackle their gap. Similarly, that organisations with 50 or more employees should be required to report, as opposed to the 250 or more employee threshold currently in place. The Government, in its response, has said it will not commit to extending the reporting obligations at the present time.

In October 2018, the Government opened a consultation seeking views on whether organisations should report, not only on their gender pay gap, but on their ethnicity pay gap. This would involve reporting on the difference in pay between people from different ethnic backgrounds. That consultation closed on 11 January 2019 and we can expect to see the outcome in the near future.

If you are concerned about your organisation’s gender pay gap reporting obligations, or would like more information, you can contact a member of our employment team on 0141 303 8886.