There is “no excuse” for private sector businesses to fail to be fully transparent about their gender pay gap, experts have warned, as organisations rush to publish their gender pay data ahead of tonight’s reporting deadline.
Approximately 9,053 organisations with more than 250 employees had reported on their gender pay data by 12pm (midday) today (4 April), surpassing the government estimate of 9,000 eligible private and public sector companies. However, the rate of reporting in the private sector remains significantly lower than the public sector.
The reporting regime marks a first step in a governmental programme to tackle the UK’s gender pay gap, which currently stands at a median average of 18.4 per cent, across both part-time and full-time work.
In a statement issued on deadline day, women and equalities minister Amber Rudd said there was “absolutely no excuse” for private sector organisations not to be transparent about their data.
“Businesses should see reporting gender pay gap data as just the first step on the road to creating fairer and more equal workplaces across the UK. They should be putting action plans in place to break down the barriers to women’s progression in their organisations,” she said.
On current figures, more than 78 per cent of the companies that have reported pay their male employees more than women, while 13.6 per cent have a pay gap in favour of women.
Many of the statistics have raised eyebrows, with budget airline flight Ryanair reporting a median gender pay gap of 67 per cent. The airline justified this by saying the majority of its pilots are male, while lower-paid air stewardesses are mostly female. It said it is taking action to correct this imbalance.
The financial sector has seen some of the largest reported pay gaps, with Bank of America revealing a gender pay gap of 46.7 per cent – which means women earn 53p for every £1 taken home by their male counterparts. Goldman Sachs International reported a pay gap of 36.4 per cent, while Barclays Bank came in at 43.5 per cent.
Of the ‘Big Four’ accountancy firms, PwC had the smallest median gender pay gap, of 14.2 per cent, compared with 14.8 per cent at EY, 15.3 per cent at Deloitte and 22.1 per cent at KPMG. Many organisations in accountancy and financial services revealed far larger gaps when partners were included in the data.
With more than 1,200 companies reporting in the last 24 hours, Jill Miller, diversity and inclusion adviser at the CIPD, described the final rush ahead of the deadline as “encouraging”, but added that the reporting itself was just the first step on the road to gender parity.
“Although reporting brings transparency to the issue, I am most interested to see the statistics about how many organisations added a narrative to their reporting process, and developed an action plan for change, as these aspects of the process were optional,” she told People Management.
“The first important step is to get those figures out there – for the next process, and the coming years, the most important thing is for organisations to prompt change so that in five or 10 years’ time they are not facing the same figures.”
The data filed by some businesses has also raised questions of reliability and accuracy, and these may be called to account. At least 17 organisations have published gender pay gaps of more than 100 per cent, while 8.2 per cent of reportees claim to have a median pay gap of exactly 0 per cent.
The Equality and Human Rights Commission (EHRC) has warned that it will use enforcement powers under the Equality Act to take action against companies that fail to comply with the reporting deadlines – or that publish inaccurate data.
However, critics have suggested that these actions could lack the full force required to deal with non-compliance and inaccuracy, as the government is yet to take any steps to legally enforce any form of sanction for companies that report inaccurately or fail to report.
John Macaulay, director and employment lawyer at Greenwoods Solicitors, told People Management there was some “confusion” regarding sanctions on non-compliant organisations.
“The EHRC hasn’t been given any new powers specifically to deal with this area, and there is a question mark over whether its existing powers can be used in respect of gender pay gap issues,” he said.
“Although employers will need to be alive to the steps set out in the EHRC enforcement policy, in reality it is likely to be the significant reputational risk that is of most concern to businesses.
“We have already seen that risk playing out in the press in recent months, and this looks set to continue as the deadline for reporting statistics passes.”
Macaulay said employers would need to “carefully manage any negative publicity that might result from their reporting obligations”.
Jane Crosby, associate at law firm Hart Brown, said: “The government may have to consider increasing enforcement powers under the regulations to make this requirement have more teeth, such as financial penalties.”
While the EHRC has warned that non-compliance could ultimately lead to a court case, with the potential for unlimited fines, Miller said the EHRC should support organisations rather than simply pursuing them through legal means.
“Companies might have struggled with their data, failed to understand what’s causing their pay gap or failed to publish over reputational fears – the EHRC proposals have a lot of room for providing support, and it should be asking companies what they need to help them get past the stumbling blocks,” she said.
“Hopefully that will get the majority of organisations publishing, leaving just a small minority of organisations that don’t want to comply.”
With the final deadline hours away, experts said the numbers were just one part of the broader issue of gender pay parity, with CIPD chief executive Peter Cheese suggesting that businesses must now use their gender pay data to give “greater clarity” on what it would take to drive genuine change on the business agenda.
“It’s vital that organisations continue to develop this narrative, and hold themselves to account in the years ahead. There are many actions we can take now, such as providing more flexible working roles and opportunities, and ensuring recruitment, development and promotion processes are truly unbiased and inclusive,” he said.
“It is often said that sunlight is the best disinfectant. The increased transparency that gender pay reporting has brought has further fuelled the debate about how we’re supporting different groups in society towards fulfilling, fair and rewarding opportunities and work for all."
Businesses will now have to update their figures every year, with prime minister Theresa May arguing that greater transparency will increase awareness and help close the “burning injustice” of the gender pay gap.