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The gender pay gap - will the Government’s proposals work?

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In July, the government announced its consultation to force companies employing more than 250 employees to report data on the gender pay gap among staff, the Prime Minster stating that he hoped it would “pressure” firms into increasing women’s wages and help his aim of eliminating the pay gap within a generation. But will it? Asks Beverly Sunderland

Equality is now compulsory

Currently, the power to force companies to report the gender pay gap (‘GPG’) is already contained in the Equalities Act 2010, but was not implemented in the hope that companies would report it voluntarily. But since the coalition government published its ‘Think, Act, Report Initiative’ in 2011, only five of the 7,000 affected companies have carried out pay audits voluntarily and reported their figures to date.  With the new government’s consultation on compulsory GPG, which took place between 14 July and 6 September 2015, the outcome is now eagerly awaited. 

According to the Office for National Statistics, the gender pay gap for full time employees is 9.1 per cent in favour of men (down from 17.4 per cent in 1997), but when full time and part time  roles are combined, the figure jumps to 19.1 per cent (down from 27.5 per cent in 1997). While for women aged 22-39, their average hourly pay is slightly higher than men, it seems that the biggest female age group affected is 40-49 (13 per cent) and 50-59 (17 per cent), which it is suggested is due to women returning to the job market after having children. 

What will the report look like?

The government recently announced that GPG reporting will apply to the public sector as well as the private sector and that ‘larger’ employers will be required to include information about bonuses awarded to men and women in their pay gap reports next year. It is not clear from this announcement if ‘larger’ means those employers with significantly more than 250 employees. However, there are still key questions on exactly what will have to be reported – will it be a single overall gender pay gap, or a detailed breakdown between roles and levels, full time and part time? Will it be median figures based on gross average hourly pay? How will the difference in pay be reported?  The answers to these questions will be key to the success or otherwise of the initiative.
The government says the target of getting 25% of women on to FTSE 100 boards has been m
While David Cameron made his rousing speech at the recent Tory party conference about equality including “I’m a dad of two daughters – opportunity won’t mean anything to them if they grow up in a country where they get paid less because of their gender rather than how good they are at their work” the following day, 14 of the 20 Tory MEPs voted against mandatory pay audits for companies listed on stock exchanges in Europe. 

The scale of the issue was also highlighted by the ‘Challenging Gender Pay Inequalities’ conference this summer run by the GW 4 university alliance where all speakers agreed on one fact - that bridging the gender pay gap will take 70 years. 

Unintended consequences?

If it is a single pay gap figure the real concerns are that companies will look at ways of enhancing their pay gap figures. This could include outsourcing areas of the business which are lower paid but traditionally attract female employees – the example of school dinner helpers is the usual example used - but administration and secretarial are another.

But what is to stop organisations finding other ways of rewarding male employees so it is not reflected in the GPG reporting? Larger contributions to pensions is an obvious solution unless such issues are taken into consideration.

On the other hand, some women choose to take on lower paid roles with less responsibility to suit personal circumstances so this fact should not count against a business when reporting overall salaries of men compared to women. It is important that reporting is like for like.

Prior preparation and planning

For companies employing over 250 employees, it is worth carrying out a gender pay gap audit to see what kind of problem it has, if any. Although this document is likely to be disclosable in any litigation, unless it is done for the purpose of seeking legal advice.

While there will be lots of professionals to assist with this, advice and guidance can be sought from the Equality and Human Rights Commission (http://www.equalityhumanrights.com/private-and-public-sector-guidance/employing-people/managing-workers/equal-pay/equal-pay-audit-toolkit/carrying-out-equal-pay-audit).

Organisations should also consider how employees should be categorised and graded. If you think there are likely to be pay gaps, face them head on. There may be lawful justifications for any differences, but if not, deal with obvious disparities now. 

Finally, everyone in an organisation should have a clear understanding of the rationale behind pay structures and training should be implemented to ensure it is applied consistently. 

But the general view is that reporting will not be enough. What needs to change is a grass roots education in business and schools and an elimination of stereotypical assumptions. Otherwise, 70 years is a long time. 

Beverley  Sunderland

By Beverley Sunderland

Beverley is managing director of Crossland Employment Solicitors.

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