The Government has recently made a number of headline announcements on new measures to tackle discrimination and inequality. The measures concern gender pay gap reporting, name blind recruitment and the representation of women on boards.
Gender pay gap reporting
We are still awaiting the outcome of the principles-based consultation on gender pay reporting (you can read our report on the consultation here). In the meantime, however, the Government has announced that the pay figures to be compared as part of the reporting process must include bonuses.
This is a very significant development, particularly for financial services employers. The pay gap within the financial services industry based on hourly pay only is higher than all other industries at 35.2%. However, this figure is likely to be much higher when other components of pay are factored into the equation. In 2009 the Equality and Human Rights Commission conducted an inquiry into the gender pay gap for annual gross earnings (i.e. all earnings including bonus) in the financial services sector and this revealed a 60% gender pay gap.
It is possible that as part of the gender pay reporting process employers will be required to offer some contextual narrative explaining their pay gap figure and, possibly, the remedial steps they have put in place to close the gap. Where employers report large gender pay gaps they will be able to point to their industry pay gap figure to help explain the outcome in their own business. Of course, it is still far from optimal for an employer to report a very large pay gap, which might be the case when bonuses are included. It is, therefore, important for employers to have considered their remedial strategy and be ready to include information about this in any contextual narrative.
A recent Business in the Community Survey revealed that the vast majority of employees surveyed are not interested in raising grievances or bringing claims on the back of unfavourable pay gap figures. However, 91% of employees surveyed said that they would expect their employer to discuss the pay gap figure with them and outline their strategy for tackling the gap.
The other announcement on gender pay gap reporting was that the reporting requirement is to be extended to the public sector (previously only the private and voluntary sectors were in scope).
Separately, the Women and Equalities Select Committee has announced it is holding an inquiry to inform Government strategy on reducing the gender pay gap, focusing on policies aimed at reducing the pay gap for women aged over 40.
Name blind recruitment
Recent research has concluded that graduates with white-sounding names are nearly twice as likely to get job call-backs than people with ethnic-sounding names. To address the issue, the Government is to champion organisations who voluntarily pledge to recruit on a "name-blind" basis. This means that an applicant's name will not be visible on their recruitment application. The aim is that name-blind recruitment processes will help to prevent unconscious bias and will ensure that job offers are made on the basis of potential – not ethnicity, gender or past personal circumstance.
Leading graduate employers across the public and private sector, such as Deloitte, KPMG, HSBC, Virgin Money the BBC and NHS have already committed to the new scheme.
The Chartered Institute of Personnel and Development will be promoting the benefits of name-blind recruitment and will be working towards embedding this as standard through its training and development courses. This means the approach is likely to spread more widely throughout the private sector.
Women on Boards
The Government has also committed to work with businesses to eliminate all-male boards in the FTSE 350. Earlier this year, businesses hit the 25% target for women on boards set by Lord Davies and supported by the Government in 2011. Lord Davies is now preparing to release his final report on women on boards, which will outline his final recommendations.