Why should SMEs bother with gender pay gap reporting?

17 May 2019 By Jo Handler

Last year, more than 350 small organisations published their gender pay gap when they weren’t legally obliged to. Jo Handler explains the benefits of voluntary reporting

It may help recruit and retain staff

Many sectors are facing significant skills shortages. In the dash to recruit and retain top talent, a voluntary report may tip the balance in a company’s favour. Even if the figures do reveal a gender pay gap, the fact an employer is taking steps to tackle the issue head-on will send out a strong message about the company’s approach to gender equality. If you operate in a sector which struggles to achieve gender pay parity, publication of a voluntary report could help you stand out from the competition.

It may attract clients

If this information could be included in a competitive tender, it demonstrates the company’s commitment to fairness at work. A decision to report may also be of interest to public-sector employers as they have a legal duty to eliminate discrimination and promote equality. The fact an employer is alive to this issue and taking steps to address any inequality may be a relevant factor when a public sector body is choosing a partner to collaborate with.

It will make the process easier in the future

Where a company just falls short of 250 employees or plans to expand, it is likely they will need to publish a report sooner or later. Preparing a voluntary report will make the process easier in the future and the company will be able to identify any issues, review the data and then take action to address these before it is legally required to publish a report.

Other group companies are already required to report

Within a group company, some subsidiaries may need to report, others may not. Smaller group companies may still decide to produce a voluntary report to ensure a consistent approach across the group.

Wider benefits 

Producing a report will raise the employer’s awareness of issues so it can take steps to address these. If this is successful, as well as being in the interests of fairness, this might also ensure the female workforce is better utilised, which will have economic benefits for the business and the wider economy in general. 

They may be legally required to publish in future 

In August 2018, the parliamentary business, energy and industrial strategy (BEIS) committee called for gender pay gap reporting to include companies with more than 50 employees. While to date, the committee’s representations have not been implemented, this may change in future. With the recent government consultation on ethnicity pay gap reporting, and the Institute for Public Policy Research calling for disability pay gap reporting, the issue of pay parity remains high on the HR agenda. 

Disadvantages of publishing a voluntary report?

A report may have a negative impact on a company if no steps are taken to address a gender pay gap. It could encourage staff to bring an equal pay claim in such circumstances. There may also be data protection issues where it is possible to identify an individual from the report. An employer will then need to identify a lawful basis for processing this personal data as it won’t be able to rely on legal obligation.

SMEs may prefer to voluntarily publish a report now to stay ahead of the competition rather than wait until they are legally required to submit one. Alternatively, ‘practising’ pay gap reporting (even if the organisation elects not to publish the resulting report) might also help it to better understand the reporting process internally and give it time to address pay parity issues in the meantime.

Jo Handler is an employment associate at HRC Law

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