Employment analysis: Hundreds of companies have filed their gender pay gaps prior to the deadline at midnight on 4 April 2018. Shirley Hall, senior office partner in the employment team at Eversheds Sutherland, and Daniel Zona, solicitor in the employment team at Bindmans LLP, examine the different options available to employers following the disclosure and looks at how businesses can close the gender pay gap in the long-term.
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- Employers with at least 250 employees are now required to publish annual information to show whether there is a difference in the average pay of their male and female employees.
What issues are employers facing when revealing the gender pay gaps?
Shirley Hall (SH): The main ones are:
- high pay gaps causing confusion about equal pay, which could be a litigation risk
- negative press commentary, which could potentially affect reputation
- impact on recruitment and retention
Additionally, particularly if contracting with the public sector, there are concerns that a high gender pay gap could impact on the award of public sector contracts.
Daniel Zona (DZ): The immediate issues are likely to be external reputational damage and employee dissatisfaction. The gender pay gap is a popular topic of discussion in the media currently and particularly on social media platforms such as Twitter.
Discussion surrounding gender pay gap, and even an individual company’s pay gap can quickly become a popular topic which reaches hundreds or thousands of people in a short space of time. This will particularly be so around the time of the reporting deadline.
Employees may feel disgruntled by their employer’s published statistics, particularly female employees for obvious reasons. There may also be some confusion among employees about gender pay gap and equal pay.
How can employers mitigate damage following the reporting of their gender pay gaps?
SH: A clear communications plan is essential to manage risks. This plan should include a carefully prepared narrative which puts any pay gaps into context, explains the difference between equal pay and gender pay, and explains how the employer proposes to work to address any pay gaps so that their commitment to equality of pay is clear.
DZ: One way to mitigate any ‘damage’ caused by publication of gender pay gap figures is through the narrative that employers can publish alongside them.
The narrative is an opportunity for employers to explain the reasons for any pay gap and to set out what steps they are taking to reduce the gap.
Reporting early rather than late may also mitigate damage. Reporting early would give the impression of transparency and eagerness on the part of the employer to identify and reduce any gender pay gap.
What are the immediate measures employers should take after they disclose their statistics?
SH: As above, employers should adopt a clear communication plan, but they should also have a clear plan to address any underlying equal pay issues they may have and to seek to close any gender gaps caused by representation of females across the organisation and particularly in senior, better paid posts.
DZ: Employers will want to ensure senior management are adequately trained on issues surrounding gender pay gap reporting and diversity and inclusivity generally.
They will also want to explore the reasons for any gender pay gap, such as structural issues related to individual progression. This may involve exploring recruitment and promotion practices, and whether managers require training in this area.
Employers will want to ensure their policies and procedures for pay and bonus reviews within the company are fair and robust.
Employers may also want to hold company-wide meetings to discuss any gender pay gap with their employees and what steps they are taking to reduce the gap. It may be a good idea to explain, in simple terms, how the gender pay gap is calculated, what definitions are used and what types of pay are included. This will hopefully reduce any dissatisfaction and confusion among employees who may feel inadequately remunerated, and they will feel action is being taken by their employer.
What are the next stages? What measures can employers take to close the gender pay gap in the long-term?
SH: It depends on the employer and the sector but can include initiatives with schools and universities to raise awareness of specific careers for females—for example, in engineering. If they have concerns that managers are recruiting in their own image they may want to roll out unconscious bias training. Employers may wish to appoint a gender champion who looks at various initiatives that can be put in place to show senior commitment.
Things like female talent programmes and mentoring/coaching processes to encourage female progression might also help.
Other things that should be considered are flexible working, shift patterns and parental support policies. Another measure some employers are considering is mixed gender interview panels to ensure a balanced view to recruitment.
In terms of pay levels, regular reviews of comparative colleagues’ salary levels against the market can assist when reasons for any pay differentials are actively considered and tested.
DZ: Employers with a pay gap, particularly if the gap is relatively large, will want to be seen to be taking active and positive steps to be reducing their gap. This can be through externally visible measures such as the accompanying narrative or becoming involved in educational or charitable initiatives.
Most importantly, employers will want to ensure their internal practices and procedures are fair and fit for purpose. They will need to address and remedy any internal and/or structural reasons for their gender pay gap.
As set out above, employers will want to ensure managers are adequately trained and that recruitment practices are fair and impartial. Employers may want to keep these matters under periodic review.
Are there any other issues employers should consider?
SH: If an employer does not have job evaluation in place, they may consider whether they should introduce this so that they know the value of the roles within their organisation. Equal to audits should also be considered.
A factor which can also be overlooked in terms of representation is breaking down stereotype roles at both ends of the organisation. In addition to encouraging women to progress upwards it is also important an employer thinks about gender barriers there might be across the organisation not just at the top. For example, consider how roles at the lower end of the organisation, which may have historically been predominantly female, could be more desirable to men such as secretarial and reception roles.
DZ: Employers will want to keep their gender pay gap under periodic review as they will need to publish figures annually.
All employers will want to keep an eye out for any changes in reporting methods, definitions or how figures are calculated. These sorts of changes will likely come with some degree of warning, however there is potential for the government to introduce changes to the current regime. For example, the government could lower the employee threshold for reporting (currently at 250 employees) to capture more organisations within the regulations.
This article was first published by LexisNexis