BusinessPeople In BusinessGender pay gap reporting – what does it tell us?

Gender pay gap reporting – what does it tell us?

With all organisations employing 250 people or more required to report annually on 5 April, will the process demonstrate inequality in pay, and what should you do if you believe that you are being paid less than a colleague?

The topic of equality in pay has made headlines around the world following publication of the BBC’s on and off-air earnings. It is a debate that continues to have ramifications with many of its stars agreeing to take salary cuts to close pay gaps.

And it is not just the very large organisations that may find themselves facing uncomfortable scrutiny. We have now had first sight of the gender pay gap reporting results, in which all organisations employing 250 people or more must report annually on the 5 April.

Gender pay gap reporting must appear both on an organisation’s own website and on the government’s gender pay gap website and must show:

  • the percentage a woman’s hourly rate of pay and bonus pay (on both a mean and median basis) is either higher or lower than a man’s;
  • the percentage of men and women in each pay quartile; and
  • what percentage of men and women receive bonus pay.

Companies may also include an explanation regarding any pay gaps, as well as what action they propose to take, but are not obliged to provide this.

Does it demonstrate inequality in pay?

What needs to be remembered is that any reported discrepancy in pay between men and women under gender pay gap reporting does not of itself give rise to an equal pay claim.

An equal pay claim would compare men and women in the same role or work of equal value.  However, gender pay reporting looks at men and women in a particular group of pay, not the actual roles. What a number of companies are now arguing is that the gender pay reporting is misleading, as more women may be employed in lower paid roles and more men in higher paid roles.

This, though, still gives rise to questions – for instance, can it be inferred that a company pays little regard to equality, maintains a “glass ceiling” and does nothing to encourage true equality in recruiting for certain roles? It certainly does not paint a happy picture.

Are there ways around it?

Gender pay reporting applies to companies employing 250 people or more; however, what it does not do is take account of people employed in any wider group structure. Individuals may find, therefore, that a large business has many thousands of employees, but if it chooses to employ people through various subsidiaries, then it may avoid having to publish its gender pay gap figures.

The other concern is that there is very little that can be done to take enforcement action against a company that does not publish the figures. The only possible way this could be done is by the Equality and Human Rights Commission seeking to take enforcement action.

The Commission is currently undertaking a consultation exercise regarding its policy. Under the new policy, it is proposing various steps which, in order, would be first compliance, then informal resolution, followed by investigations and formal agreements, ultimately with non-compliance resulting in court proceedings and fines. We will have to wait to see if this will be put into effect.

Finally, the government will issue a report on how well gender pay reporting is working, but such a report does not need to be done for a good number of years yet.

Will things change?

The benefit of gender pay reporting is less about compelling changes through legislative penalties, but rather in the damage that may be caused to a company’s profitability through negative PR.

The publication of information does put the spotlight on how well a company is addressing matters, and perhaps putting the focus on wider matters such as recruitment, promotion, flexible working and family friendly practices. Companies are also becoming more aware of how equality and other practices are viewed in today’s market – if they are not addressing such matters, then they run the risk that they will start to lose out on contracts and may struggle to attract top talent.

Reaction to gender pay reporting has already brought about steps being taken by companies.  EasyJet were one of the first ones to address the issue, given a gender pay gap of 51% between men and women. Whilst they sought to explain this, the CEO has now just taken a salary reduction of £34,000 to equalise his salary with that of his female predecessor.

The BBC has also announced changes. Its auditors have highlighted that pay rate setting has been “far from perfect” and the BBC has announced changes that include substantial pay cuts for some men, including its on-air presenters, as well as pay rises for some men and women. However, the BBC has said that it will go further. Additional changes will include: (a) the introduction of a new framework for determining the pay of people on air; (b) publication of the pay ranges for almost all BBC jobs; (c) to actively review the progression of women, including looking at working practices and support for women returning to work; and (d) to accelerate the progress of equal representation of men and women at all levels on air.

What can you do if you believe you are not being paid the same as a male, or indeed female, colleague?

There are various ways such a concern can be aired, which could include:

  1. Whilst gender pay gap figures are useful as it may show a disparity in pay, it is not determinative of inequality – it can though be used as leverage in any complaint.
  2. Raise the question – whilst there is no longer a statutory procedure for raising a questionnaire, there still remains the informal approach, which Acas has provided guidance on. Acas suggests you should: (1) identify who your comparators are, namely those you believe are receiving better terms and conditions than you; (2) explain why the comparators are doing equal work to yours; and (3) ask how pay is determined and what in the comparators’ job descriptions could explain any difference in pay. No doubt the missing question is to also ask what the proposed comparators are paid.
  3. If this does not achieve the desired result, or you may even decide to opt out of the informal approach, a grievance can be raised regarding any perceived inequality in pay. This is also beneficial, as a party who unreasonably fails to follow the Acas Code of Practice in relation to a grievance could find any compensation awarded being adjusted up or down by up to 25%.
  4. The parties may wish to try and resolve the concern by way of some form of mediation or arbitration.
  5. Finally, if all else fails, then it means a claim being brought before the Employment Tribunal.

Summary

Gender pay reporting is not a fix all tool, but its introduction has assisted the change in views. It may take some time, but change is initially driven by having to publish this information, with the real driver being the benefit to an organisation in demonstrating change.

When rules relating to age discrimination were introduced, it was seen by some as a nonsense; however, culture has now changed and the concept is now embraced. One can only hope that the abolition of gender pay differences will follow suit.

David Israel is a partner in the Employment Team in the London office of Royds Withy King. He can be reached by email at david.israel@roydswithyking.com.

 

 

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