Gender pay in the spotlight - time for employers to check their own house is in order

Few will have missed the media storm that erupted when the salaries of some high profile TV personalities were recently published. The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 require all employers with 250+ employees on 5 April 2017, to report specific gender pay gap data by 4 April 2018 at the latest. Whilst the Regulations do not require employers to publish the actual salaries of particular employees, employers will now understandably be concerned that the publication of their own gender pay data may now come under increasing scrutiny from within their own workforce, as well as having the potential to impact negatively on their wider reputation.

Publishing your gender pay gap data – when is the right time?

Some companies have opted to publish their gender pay gap data already; 34 as of today’s date.  Among these numbers are some household names – all of whom have reported a gender pay gap in their workforce.  What these early-publishers have in common is a detailed voluntary narrative explaining the steps they are taking to tackle their gender pay gap.  This sends a powerful message to their employees that the issue matters to them, and they are getting on with doing something positive about it.  As a result, there has been a distinct lack of negative publicity surrounding the publication of this data.

This is good news for other employers concerned about their own gender pay picture.  Gender pay gap reporting has got off to a slow start, and the vast majority of employers are yet to publish their data.  There is still time to get started with addressing any gender pay gap, and show the steps you are taking to tackle any unjustified imbalance.  It is important to remember that the majority of employers will have a gender pay gap – this doesn’t necessarily indicate an equal pay issue or a gender biased pay policy.  What is more important now is how employers address any issues that are uncovered, and work with their employees to encourage a more gender balanced pay picture.

Early publication seems to have attracted goodwill and positive commentary

Employers considering the best time to publish their data may be waiting for the competition to publish, or hoping a late publication will be subject to less media scrutiny; with so many employers likely to publish on or around the 4 April 2018 deadline.   Late publication also gives any initiatives more time to gain traction, but cannot, of course, change the ‘snapshot’ data taken on the 5 April 2017.  It is difficult to make generic recommendations about the best time to publish, as each employer’s influencing factors will be different.  However, publishing early with a transparent approach to addressing any imbalance seems to attract the goodwill of employees, and has been positively commented on by those carefully watching the evolving picture.

A detailed voluntary narrative is vital, sending a powerful positive message to employees…

Producing a voluntary narrative to accompany your pay data will be key to positively communicating the information.  The voluntary narrative is, as the name suggests, optional, but is your opportunity to explain the causes of any imbalance, and the steps you are taking to address it.

As a starting point, your voluntary narrative could explain:

• Overtime – The extent to which overtime is routinely worked, and the proportion of men and women working it. How does this impact on the pay data?
• Bonus schemes – Any annual bonus schemes which pay out in April will be taken into account in both the headline gender pay figures (on a pro rata basis) and the gender bonus gap. Does this skew the data?
• New joiners and absence during the bonus year – How has family leave or new joiners impacted on your data? Remember, there is no mechanism for annualising bonus pay for those whose bonuses are reduced to take account of family leave or joining part-way through the year. Do you need to explain the impact of this?
• Part-time employees – What impact is the payment of pro rata bonuses to part-time employees is having on your bonus data? Bonus pay is not assessed on a full-time equivalent basis for part-time employees.
• Skills shortage – Does the existence of a skills shortage for particular roles mean there is a salary premium for anyone able to perform it?
• TUPE and red circling – Are there discrepancies in pay for historical reasons (such as previous TUPE transfers), or as a result of factors unrelated to gender, such as regional variations?
• Action plan – What action you are taking to narrow the gender pay gap. For example, initiatives to recruit or promote more women; this may lead to a short-term widening of the gender pay gap, but the gap will narrow over time as the women progress through the organisation.

… but you must also prepare to act on your pledges

As gender pay gap information should remain online for three years, it will be easy for the closing of any gender pay gap to be monitored.  Employers must be prepared to be challenged on the success of any initiatives implemented, and to report on their progress year on year.

What can we learn from the data published so far?

From the data available so far, predictably, it is the lower numbers of women in more senior roles, and the higher proportion of women in more junior positions that gives rise to the gender pay imbalances reported to date. So, what are employers doing about identified imbalances, and what initiatives should you be considering?  Some actions to consider are:

• Introducing a mentoring scheme: Mentoring schemes to encourage female progression have worked successfully in many businesses, and positive role models have a key part to play in paving the way for other women in the business.  Such a scheme should include support for women returning from maternity leave to the workplace.
• Reviewing flexible working arrangements: Is there a culture of flexible working arrangements being the preserve of lower level positions? What can you do to ensure senior roles are open to flexible working?  Do employees feel that flexible working arrangements may be an obstacle to career development; if so, what can you do about this?
• Reviewing recruitment and pay practices: Recruitment and pay practices may be playing a part in any gender pay imbalance.  Consider the starting salaries being offered to men and women; are men more likely to negotiate a higher starting salary?  What is the proportion of men and women applying for promotion, and who is more likely to be successful?
• Talk to the women in your business: Opening up a dialogue with your female employees is one of the best ways to ascertain how to tackle any gender pay gap.  What are the barriers to women progressing in the company?  What is the take-up of development opportunities between the sexes?

How can Osborne Clarke help?

We are helping many of our clients prepare for gender pay gap reporting by: providing tailored in-house training; helping employers audit their businesses (with the benefit of legal privilege); advising on any legal issues arising from the pay picture; and assisting with the preparation and publication of the voluntary narrative, together with identifying and helping employers implement the pro-active measures they should now be taking to close any gap.

If you would like our help with up-skilling your internal team or preparing your gender pay gap data, please contact your usual Osborne Clarke contact.