It’s not long until 4 April 2019, the deadline for private sector year 2 gender pay gap (GPG) reports to be submitted. Last year, according to PayGaps.com, 87% of organisations submitted their GPG report in the 4 weeks before the deadline. In this Law-Now, we provide some insight into the trends emerging from the year 2 reports lodged so far and highlight some recently published guidance to assist those involved in the final push to draft and complete year 2 GPG reports.
All doom and gloom?
In February 2019, the BBC reported that, of the 10% of private sector employers who had submitted year 2 reports so far, 4 out of 10 had reported wider gaps than they did in 2018. This report, and the negative publicity surrounding it, might seem to be a setback for those who believe that the greater transparency generated by the GPG reporting requirements would ultimately lead to a reduced gender pay gap.
However, first of all, we have to bear in mind that we are looking at a very small subset of data – it is surely too early to start drawing conclusions in terms of the effectiveness of the reporting. Secondly, dig a little deeper and things are not as bad as the reports would at first suggest. Although, according to the BBC, 4 out of 10 gaps have not improved, turning this on its head means that 60% of private sector employers’ pay gaps must have either improved or stayed the same. In fact, the BBC also reported in February that based on the year 2 reports so far, the average median pay gap is 8.4% which is an improvement from last year when it sat at 9.7%.
PayGaps.com reported that, as at 13 February 2019, 767 of the 1000 year 2 reports published had accompanying narratives, a 31% increase from last year. The BBC also reviewed the reports and accompanying narratives submitted by organisations who reported a GPG increase. The narratives provide explanations for the increase of pay gaps within various organisations. For example, departure of a number of senior female employees appears to have been sufficient to increase the median pay gap of a major car mechanics chain from minus 15.2%, to positive 14%. The gap at an energy company also increased from 13% to 18%. This was partly due to the technical issues that relate to the way the legislation requires employers to perform the GPG calculation, which in turn meant that the fact more female employees than male employees had been opting into a salary sacrifice scheme impacted their figures.
The fact that your organisation's year 2 statistics can turn on one-off events, such as the departure of key individuals, a business acquisition or technical factors, reinforces how important it is to provide an accompanying narrative to your pay gap figures. Your narrative should be used to explain the year on year change and to give context. Your year 2 result may not be all that you hoped, but any realistic employers knew that there would never be quick fixes here, so, recognise any areas where you are improving and/ or taking positive steps to improve and focus on those changes. The headline sections below could be used to structure your narrative:
- Address the underlying causes of your gap
- What you have been doing over the last year to close the gap
- Break down your results
- Set out your action plan and promises – what you are going to do next?
- Look at how your gap compares with the wider picture in your sector
- Use individual case studies from employees who have benefited from your steps to close the gap – it is powerful to hear directly from the employees.
In August 2018 we wrote about the guidance published by the Government Equalities Office (GEO) which outlines (based on evidence) “what works” in terms of reducing the pay gap. The report looks at the actions some employers have already taken and separates them into three lists based on their results – ‘effective’, ‘promising’ and ‘mixed’.
Since then, further guidance has been published by both the Equality and Human Rights Commission (EHRC) and the GEO.
The push for accompanying narratives and greater transparency is echoed in the EHRC report “Closing the Gender Pay Gap”, published in December 2018 www.equalityhumanrights.com. The EHRC report sets out the findings of the EHRC research into the GPG narratives and action plans published by employers in year 1, in a bid to understand the main causes for organisation's pay gaps and the actions organisations have been taking to reduce their gap.
The EHRC’s key findings are summarised under the following headings:
- Recruitment, development and promotion
- Flexible working and shared parental leave
- Positive action
- Bonus and performance related pay
- Apprenticeships and other educational schemes
- Equal pay audits
The findings in each category explain the key trends across the board and useful examples.
The report goes on to offer practical “Ideas for action” which have delivered positive results in each of the categories. The EHRC report is more detailed than the GEO’s earlier report as it offers more specific actions in each category.
Two further pieces of very practical guidance were published by the GEO last month:
This guidance also helpfully explains how to find out the answers to these questions through analysis of your data.
- “Eight ways to understand your organisation’s gender pay gap” https://gender-pay-gap.service.gov.uk/public/assets/pdf/understand-your-gender-pay-gap.pdf sets out eight questions, which employers should consider in order to identify the potential causes of their gender pay gap and then take effective action, such as:
- Do people get stuck at certain levels within your organisation?
- Is there a gender imbalance in your promotions?
- “Four steps to developing a gender pay action plan” https://gender-pay-gap.service.gov.uk/public/assets/pdf/action-plan-guidance.pdf is a 4 step guide to developing an action plan based on feedback from employers who have successfully developed and implemented such a plan.
Most employers will be planning to set out ideas for action in their year 2 report. The good news is that, there is a lot of guidance out there and you do not need to start from scratch.
Getting over the line and moving forward
Remember, gender pay gap reporting is not expected to deliver instant results. It’s a long term goal, not a quick fix. Keep reviewing and refreshing the actions you have put in place; give them time to deliver but if they aren’t delivering, don't be afraid to rethink your approach or add an extra dimension to your strategy