In recent months there has been growing public scrutiny of gender inequality, particularly in light of the #MeToo movement and high-profile examples of apparent pay disparity. The current focus is on the gender pay gap data published by over 11,000 UK organisations in the regime’s first reporting year.
Some 78 per cent of the organisations which reported have a median pay gap in favour of men; eight per cent of employers reported no median pay gap; and the remainder reported pay gaps in favour of women. The private sector, with an average median pay gap of 8.1 per cent, performed better overall than the public sector, with an average median pay gap of 14 per cent. Only one in three organisations have a majority of women among their top earners, which is consistent with a lack of women in senior positions being the most commonly cited driver of the pay gap.
Key reporting trends
The majority of employers have used narratives in their pay reports as a mouthpiece to demonstrate positive steps they are taking to eradicate the gap. Most highlight that having a gender pay gap is not the same as paying men and women unequally for the same or similar work, but instead is attributed to uneven distribution of men and women across the highest paid and lowest paid brackets of the workforce.
What should employers be doing?
For employers, prevention is better than cure, and proactive steps should be taken to identify any pay disparity in their organisation. Where pay disparity is identified, it should be investigated and measures taken to address inequality before grievances or claims arise.
It is likely that employers whose reports show a large gender pay gap will receive queries or complaints from employees. These may consist of questions as to why the gap exists, what is being done to rectify the gap, or requests for further information regarding the employee’s specific role or department. Employers consequently need to think carefully about the best way they can allay such fears.
Employers are already experiencing the impact of publication of this data on their businesses – particularly in relation to brand, talent pipelines, employee engagement, and business growth. The data will no doubt also be used to demonstrate an organisation’s commitment to equal opportunities in response to pitch opportunities and other bids for work.
Looking ahead, it is likely that there will be an increase in the number of equal pay and discrimination claims being brought. It is anticipated that this is most likely to occur in respect of bonus gaps as significant differences in bonus pay may be more difficult to justify by reference to objective criteria.
Enforcement action and next steps
The Equality and Human Rights Commission (EHRC) has stated it will take enforcement action in response to breaches of the Gender Pay Gap Reporting Regulations. The EHRC can, in theory, obtain court orders to ensure companies comply with the regulations, and has said it it will initially focus enforcement work on employers which fail to publish the information required by the regulations, and then turn to the accuracy of data published.
The chair of the House of Commons women and equalities committee has stated that her committee will be asking for monthly progress reports of action taken against non-reporting organisations.
Research published by PwC in March 2018 suggests that the UK’s progress towards empowering women in the workplace has been slow compared with other developed nations, slipping from 14th place last year to 15th place this year in a ranking of 33 OECD countries.
There is no doubt that public scrutiny and pressure as a result of publication of gender pay gap data will be as significant as the threat of enforcement action in the drive to close the gender pay gap. Employers should keep this in mind and implement meaningful, sustainable diversity initiatives to address identified problem areas.
Louise Skinner is an employment partner at Morgan Lewis