Conflicting guidance has been issued and it is hoped this will be resolved in the final Regulations, although indications are that “option 2” may be the Government’s preferred approach. This raises the prospect that regulations aimed at addressing gender inequality may end up shining more of a light on wider inequalities of income distribution within companies. This might have unintended consequences, as employees rage at the small number of senior staff grouped together in the highest quartile.
In addition to publishing the report on their website and keeping it there for a period of at least three years, employers will also be required to upload it to an official website and the Government has pondered producing sector league tables. While it remains to be seen how viable this will be, it highlights one of the new law’s main objectives – namely, shining a light on employers’ pay practices and providing employees with information to challenge their employers and force change. Increased numbers of grievances can be expected.
But will the information provided be all that useful? A paradox of the new regime is that mean pay gap statistics can hide systemic discrimination. For example, an employer with 1,000 employees may report that the mean hourly pay of both male and female staff is £20 per hour, producing a gender pay gap of zero. However, if this is the product of 100 male managerial employees earning £52 per hour and 400 female managerial employees earning £22.50 per hour, and 400 male factory employees earning £12 per hour while 100 female factory employees earning £10 per hour, it can be seen that there are real disparities in the like-for-like comparisons which are hidden by the overall figures.
The converse applies. Another 1,000-employee company may report a gender pay gap of 20%, based on male mean hourly pay of £20 and female of £16. But this may be the result of 400 male managerial employees earning £22.50 per hour and 240 female managerial employees earning £22.50 per hour, and 100 male factory employees earning £10 per hour and 260 female factory employees earning £10 per hour. In this scenario, the apparent discrimination vanishes when the most relevant comparisons from an equal pay law perspective are made.
In light of this, some employers might decide to publish further information, beyond the minimum required categories of data set out above, in order to provide employees with additional context and potentially head off widespread complaints. A more granular analysis comparing the position grade by grade, function by function and so on may be desirable.