Mind the gap: gender pay and the recruitment sector

The copy in this article was first published with Recruiter

The gender pay gap has long been an unacceptable feature of the UK labour market. While the difference in average earnings between men and women has been closing, it still stands at a sizeable 18 per cent and the government wants this gap eliminated within a generation.

The Gender Pay Gap Reporting Regulations (GPGR), which come into force on 6 April 2017, have been designed to further that objective. They will require “employers” with 250 or more “employees” to publish calculations showing pay gaps in their organisations (“snapshots“) every year. 4 April 2018 is the latest date by which the first snapshot must be published.

These snapshots must be published on the employer’s website and uploaded to a government site, making them publicly available to clients, employees and potential future recruits.

The snapshots will reveal the difference between men’s and women’s mean and median pay; their mean and median bonuses; the proportion of men versus women receiving a bonus, and the proportion of men and women in each quartile of the overall pay range.

A company director (or other “senior individual“) must sign a written statement confirming the report is accurate.

It is a legal requirement for relevant employers to publish snapshots but the GPGR do not contain any enforcement mechanism or sanctions for failing to do it.

We consider that this legislation will have a skewed, potentially misleading, impact on agencies and other employing entities in contingent workforce supply chains. Lobbying efforts did not result in agency or other contingent workers being excluded from the reporting obligations and draft government guidance is that “agency workers will form part of the headcount of the agency that provides them and not the employer they are on assignment to“.

It follows that there is a risk of agencies and other employing entities in contingent workforce supply chains having to publish confusing and/or misleading data, for example:

• an end-user client business which pays women poorly may have fewer than 250 of its “own staff” so it will avoid having to report;
• an end-user may have an exemplary gender pay balance when it comes to its own staff but use temps who are worse paid and are mainly women – this gap will not be highlighted by the gender pay snapshots (but it may of course pose risks under the Agency Worker Regulations);
• the snapshots risk being meaningless or misleading because they will show differences between average earnings of men and women across an agency (or other employing entity), which may be supplying temps to a range of end-user clients, instead of showing averages at particular end-users (which could be more instructive and fairer, particularly bearing in mind that the end-user will often ultimately determine what an agency pays its contingent workers).

It would seem that the GPGR is the latest piece of employment law which will work more smoothly when applied to the “perm employment” model than when applied to modern labour markets featuring contingent workforces.

We therefore anticipate that agencies and other employing entities in contingent workforce supply chains who publish gender pay snap shots will want to take advantage of the option to publish explanatory statements. Setting the data in context will be key to reduce the potential for the GPGR generating confusing, misleading data when it comes to agency and other contingent workers.

Employers in the recruitment and staffing industry should also take industry-aware advice to devise appropriate overall GPGR and equal-pay strategies – it is now clear that for the recruitment sector “minding the gap” will involve not just being alert to gender pay differentials and taking appropriate steps to address them, but being mindful of the particular issues and challenges which this new reporting legislation poses for agencies and other large-scale employers of contingent workers.