Do you remember the days when employers used to include a clause in employment contracts obliging employees to keep details of their salary and benefits confidential, and not to share them with other members of staff? Those days are long gone. We are now living and working in a society that demands transparency at every level. What has historically been a very private matter of contract between an employer and employee is now fair game for public scrutiny and debate.
We are fast approaching the deadline for qualifying businesses to publish their gender pay gap figures, and it has been a long time since the news didn't include a story on employment-related reputational matters for businesses, be it the gig economy, minimum wage or equal pay.
There was always going to be an initial reaction to the BBC’s 2017 data revealing the salaries of its top earners, with great public interest in what our national treasures take home. The BBC is now taking steps to address its gender pay gap, and a number of male broadcasters have announced that they will voluntarily take a pay cut (including John Humphrys, pictured).
We're starting to see more businesses attempt to redress the balance between male and female pay. The new boss of easyJet, Johan Lundgren, has publicly confirmed the voluntary reduction of his salary to bring it in line with his female predecessor.
While pay reductions may be negatively regarded by some, it is a step towards meeting political and public pressure to close the gender pay gap, and we expect more companies to look at this as an option. Public recognition that this level of inequality is not acceptable is quite a new phenomenon in this country, but the pressure on businesses will continue to mount.
As organisations work through their preparation for compliance with the gender pay reporting obligations, they will undoubtedly come across situations that give rise to equal pay arguments. So how can they decide the best way to correct these discrepancies? Should they take the easyJet approach and bring men’s salaries down, or increase women’s pay?
The correct approach will vary from business to business, but the starting point ought to be a proper analysis of the market rate for the job in question. In some respects, the public sector is ahead of the private sector in this regard as it has long been working with clear pay brackets, job families and externally graded pay schemes. Such arrangements significantly help to eliminate pay inequality by assessing and valuing the role rather than the individual.
The problem with simply reducing male salaries or increasing female ones is that is fails to address the root of the inequality and could flag the potential for a legal claim to those who have historically been the subject of unlawful employment practices. Organisations also need to consider the impact on related benefits – a point that former BBC China editor Carrie Gracie highlighted in her open resignation letter. A differential in salary may be one thing, but the impact on pensions can be much more dramatic, particularly where the inequality goes back a long way.
In today's world, every employer should be ready, willing and able to explain their internal pay structures and articulate the reasons for any differences, and there are some interesting studies being published on the possible explanations for a gender pay gap. Where there are differences that have no other justification besides gender, organisations will need to expedite their efforts and ensure that they have followed the necessary steps to put a watertight strategy in place.
Esther Smith is a partner at TLT