According to a forecast by the World Economic Forum, if the current rate of change continues, the economic gap between men and women globally will not close before 2133. However, recent statistics published by the BBC show that the UK is the 18th most gender-equal country in the world. Is gender therefore still a live issue in the workplace in the UK? Or should the Government be focussing its policy initiatives on other protected characteristics?
The gender pay gap
The Government's agenda for 2016 suggests that gender inequality is still very much in focus, with section 78 of the Equality Act 2010 due to come into force in the course of next year. This will make it mandatory for all employers with at least 250 employees to publish information about their gender pay gap.
Paying men and women different amounts for equal or similar work has been illegal for over 40 years now, first under the Equal Pay Act 1970 and now under the Equality Act 2010. However, it is intended that the new measure will lead to increased transparency and a new commercial interest and incentivisation in achieving gender equality.
The Government launched a consultation this year, titled "Closing the Gender Pay Gap", which closed on 6 September 2015. We are currently awaiting the Government's response to the consultation and, in particular, precise details of what pay data employers will be required to publish. However, the Prime Minister has already announced that bonus payments will be included. This will be of particular relevance to any employer with a significant variable element to their remuneration packages, notably employers within the financial services sector.
Some employers have expressed concerns that this may require them to disclose sensitive financial data (where bonuses have an element related to the performance of a company or a particular division) and to justify the more subjective metrics upon which calculation of their bonuses is based. However, this seems in line with the general trend towards making bonuses more transparent.
Whilst it is not anticipated that there will be any particular penalties for companies and organisations failing to bridge the gender pay gap, the reputational damage and negative publicity that large employers could face is considerable. There are also likely to be knock-on effects on employee attraction, engagement and retention. Employers would need to be able to justify any differentials in pay in a very public forum.
Equal pay claims
Employers who are exposed as having a large gender pay gap are also at risk of potentially significant employee claims for equal pay, which could be backdated as far as six years. Equal pay claims are currently highly topical, with the hearing of the test cases against Asda hotly awaited.
Equal pay claims have traditionally been found in the public sector space and the private sector has, for the most part, not paid too much attention. However, where a valid equal pay claim is made out, the cost to the employer can be substantial.
In October 2012, in what was described as a "landmark case" at the time, the Supreme Court judges held that more than 170 former Birmingham City Council employees could launch pay equality compensation claims in the High Court, on the basis that they had not been eligible to receive bonuses, which male comparators in equal work had been eligible to receive. This essentially extended the time limit for bringing a claim to six years (as opposed to the six-month limit in the Employment Tribunal). The judgment resulted in around 16,000 claims against the Council, and it was estimated that the total cost to the Council was likely to reach about £1.2 billion. The Council ultimately agreed to settle the claims, but reports suggest that a number of the settlements still remain unpaid to date.
Further, as Asda are now finding, equal pay is not just a public sector issue and private sector employers should not be complacent about the gender pay gap. Whilst the Equality Act 2010 has previously been regarded as relatively "toothless" when it comes to addressing the equal pay gap, increased public awareness, a Government focus on the issue and media interest have brought the matter to the forefront.
In October 2014, an equal pay test case was brought on behalf of 400 workers against Asda. The key point in this case is the issue of job evaluation. Any female employee is entitled to enjoy contractual terms that are as favourable as those of a male comparator, if they are employed in jobs of equal work. There are three categories of equal work: "like work", "work rated as equivalent" and 'work of equal value'. The relevant category in the Asda case is "work of equal value". The case will determine if the supermarket's in-store staff jobs, which are mainly held by female workers, are of equal value to higher-paid jobs in the company's male-dominated distribution centres. If the Court finds that the roles do in fact constitute equal work, workers could be entitled to six years' back pay for the difference in earnings, potentially costing Asda millions, if not billions, of pounds.
The hearing is expected to go ahead in the first half of 2016 and the judgment could have wide-ranging implications for other employers in the retail space. Whilst only a small number of Sainsbury's workers have brought equal pay claims to date, it already looks like a number of workers may be waiting in ready anticipation to bring a claim, depending on the outcome of the Asda case.
The case highlights the importance of job evaluation. For employers, the most comprehensive way of addressing pay inequalities is through a job evaluation study or job evaluation scheme (JES). A JES is an analytical procedure for grouping jobs into salary bands on a gender-blind basis.
Given the above, employers may wish the review their current pay systems. However, this comes with a word of warning. There is a risk that once any inequalities in the current system have been identified, employees will find it easier to bring equal pay claims for back pay. Employers may also find that they need to increase the salary for some lower paid employees, increasing staff costs to the business.
Female representation: women on boards
Gender issues are not limited to pay; they also relate to representation – the so-called "glass ceiling". Representation of women in senior positions in government, partnership level roles and on the boards of FTSE companies remains woefully low for such a progressive country. As it stands, women make up only 23 per cent of government ministers. In terms of the FTSE companies, there has certainly been progress since the Government commissioned a review by Lord Davies of Abersoch in 2011, but there is still a long way to go.
As at 1 October 2015, there were no male-only boards in the FTSE 100 and women held 26.1 per cent of board positions in those companies, up from 12.5 per cent in February 2011. Within the FTSE 250, women held 19.6 per cent of board positions, but there remain 15 male-only boards. Remember – women make up nearly 50 per cent of the UK workforce.
On 29 October 2015, Lord Davies published a second report on improving the gender balance on British boards, making a number of new recommendations to maintain and encourage greater momentum going forward. The report, amongst other things, recommends that the voluntary, business-led approach to improving female board representation be continued for another five years. Notably, however, the report does not consider that legislative quotas are warranted.
Whilst most employers will be comforted by this news, there still remains much lively debate around the need for quotas and some form of "positive discrimination". Indeed, in his report, Lord Davies notes that quotas have or are being introduced in a number of other European countries, who are accordingly likely to meet their targets. There is a risk that, by sticking to its voluntary approach, the UK may fall behind on the gender equality scale, both in Europe and internationally.
Initiatives like The 30% Club have already demonstrated the benefits to businesses of taking the lead in the gender equality space. The favourable publicity generated, and the progressive company image that reflects positive action taken, are invaluable. It is becoming increasingly clear, particularly within the professional services sector, that clients are genuinely looking for a more diverse service provider, and gender equality is a key factor. Accordingly, the commercial benefits of being proactive are commercially measurable. Indeed, it is undoubtedly preferable to lead voluntarily rather than being coerced into change, and employers need to be ready and prepared for ever closer scrutiny.