Thursday, March 1st, 2018
In a move intended to address gender pay imbalances in the workplace, on 6 April 2017 the government brought into force legislation which requires large employers with 250 or more employees to annually publish their gender pay gap figures.
The pay differentials upon which employers are required to report are:
- the average gender pay gap;
- the average gender pay gap for bonuses;
- the proportion of male and female employees who received a bonus; and
- the proportion of men and women in each of four different pay bands.
What is the gender pay gap?
The gender pay gap indicates the average difference in pay between men and women across the whole of an organisation. This is not to be confused with equal pay, which requires that men and women performing comparable roles should be equally remunerated.
The current picture
The Office for National Statistics report that the national average pay gap between men and women in 2017 was 18.4%. Although this has reduced from 27.5% in 1997, the current figure still remains concerningly high.
It is hoped that the new regulations will act as a catalyst to bring about faster progress in narrowing the pay gap. The intention is to create greater transparency around the issue and encourage employers to take action to address their pay differences.
Of the 800 employers who have so far published data those with the most significant gender pay gaps include Easyjet, whose mean gender pay gap is 51.7%, whilst at Virgin Money plc, women are on average paid 32.5% less. It doesn’t get any better when looking at bonuses as bonuses paid to women were on average at least 43% lower than mens at each respective organisation.
But what are some of the causes that lie behind these disparities between men’s and women’s pay? It is often found that organisations with a large gender pay gap tend to have a far greater proportion of men than women in higher paid, senior positions. Men are regularly dominant in well remunerated senior and leadership positions in the organisational hierarchy, such as managerial, executive and directorship roles whilst women disproportionately occupy lower skilled, lower paid and more subordinate positions such as administrative roles. By way of example, Easyjet explain that their gender pay gap is due to their pilots being predominantly male with significantly higher salaries of £92,400 on average as compared to women who are in the main employed as cabin crew earning on average £24,800.
An issue often cited as being a barrier to more women advancing to senior positions is that women generally take on a greater share of caring responsibilities, often needing to take time out of their careers to look after children (or relatives). Furthermore, many women who do return to work after a period of maternity leave do so on a lower paid part-time basis. Some are unable to return to work altogether because of a lack of flexible working or due to external factors such as a lack of affordable child care. This therefore places constraints on women’s career progression and earning potential.
Although not necessarily the case in every circumstance, discrimination can also be a factor in perpetuating gender pay gaps. In some organisations there may exist a culture of gender discrimination in which women are regularly overlooked for promotion or in which a higher value is placed on men’s work than women’s.
What can employers do to reduce their gender pay gaps?
Employers are able to provide a narrative statement along with their published gender pay gap data. This allows them to explain the reasons behind any pay gaps identified, provide a long term action plan for tackling it and in future years report on any successes in narrowing their pay gaps.
There are a number of steps employers may wish to take to reduce their pay gaps. These include:
- Revising their pay review processes to ensure a consistent approach to pay increases;
- Carrying out equal pay audits to eliminate differences in pay where men and women are doing equal work;
- Examining their flexible working policies, and promoting diverse ways of working to include part-time working, compressed hours, job sharing and working from home. This should be encouraged amongst both male and female staff members, but particularly so where necessary for women in senior positions;
- Making it more attractive for men to undertake a greater share of the caring responsibilities by enhancing paternity leave and encouraging shared parental leave to alleviate the impact of parenthood on women’s’ career progression;
- Educating employees and management of the existence of such policies;
- Providing support with child care, such as a child care voucher scheme to increase the retention of women returning from maternity leave;
- Introducing unconscious bias training for management to minimise the effects of gender bias on their decision making when it comes to matters such as recruitment, pay and promotions;
- Putting in place mentoring and sponsorship programmes which aim to match capable female employees with a senior mentor who can inspire, coach and advocate their career progression within the organisation;
- Set clear, measurable targets for female representation at senior levels so that progress can be monitored.
Tipping the balance
The reasons behind such significant pay gaps are varied and complex. Nonetheless, there can be significant benefits to employers in making efforts to reduce this. Greater diversity, particularly at the senior management level, can bring about new perspectives and ideas, which drive innovation and can in turn generate further growth in a business.
Quite importantly, the data is to be published on the employer’s website and will also be publicly available on a government website for a period of 3 years. From a recruitment perspective, future talented employees may otherwise be put off from applying to employers with such large pay gaps. Furthermore, a lack of action may cause discontent among current employees, damaging morale and productivity. Individual female employees will be more likely to challenge the amount they are being paid and gender pay gap data could potentially be used as supporting evidence for Tribunal claims where the back story to the gap is discovered to be discriminatory pay practices. Not least given the reputational risk, the costs of doing nothing to address the imbalance may be far too great.
Hanne & Co- Employment Law Department