The gender pay gap reporting regime regulations will be in place from October 2016. Businesses of 250 employees or more will have to start calculating the pay gap from April 2017, with the first league tables published a year later. But the question on everyone’s lips is what will all of this mean in practice, and will the pay gap, which currently stands at 19.1%, narrow as a result?
The first point to make is that gender pay gap reporting is not about men and women who do the same job getting equal pay. The Equal Pay Act already makes it illegal for employers to pay women less than their male counterparts for doing the same job (and has done since 1970). Gender pay gap reporting looks at the average and median pay and bonuses of men vs. women in an organisation and will cover employees, workers and contractors. The numbers of men and women at different salary bands will also be reported so that career progression also becomes more transparent.
It is thought that reporting the gender pay gap is likely to make businesses turn their mind to the issues causing pay gap discrepancies. A significant gender pay gap is likely to be embarrassing for the business, generate negative publicity and could create legal exposure. For example, if a female employee is running an equal pay claim or a gender or maternity discrimination claim, evidence of a large gender pay gap will present a helpful backdrop for those claims. It is objective evidence that supports an argument that there are obstacles in the way of her succeeding at work. However, it does not necessarily follow that these obstacles are caused by discriminatory attitudes or practices, nor will a gender pay gap in and of itself give rise to a claim.
The ‘Empowering Productivity’ report by Jayne-Anne Gadhia published in March 2016 established that only 14% of Executive Committees in financial services organisations were comprised of women.
Where women do sit on executive committees, they tend to be in support roles (seen as cost centres) rather than “profit and loss” functions (seen as revenue generating or profit centres). A report by New Financial LLP found nearly two thirds of heads of HR (61%) and more than half of heads of communications (52%) on excos were women, but only 9% of heads of a division or region, and just 10% of the C-suite.
There is a ‘permafrost’ in the mid-tier where women do not progress to the top or leave the sector, not just because of childcare reasons but because the culture is just not right.
To work towards gender equality, over 70 financial services institutions and insurers including Barclays, Deutsche Bank, Blackrock and Hermes Investment Management have signed up to the ‘Women in Finance Charter’ since March 2016, which means that by September these firms will have had to detail their own tailored targets for making progress towards gender balance on their websites.
If it is found that there is a large gender pay gap, it’s advisable that employees start asking questions discretely. The Equality Act provides protection from victimisation if an employee asks their colleagues or former colleagues relevant questions regarding pay if the purpose is to establish the extent to which they have suffered gender pay discrimination. Sometimes, asking the person in the same job sitting next to you on the desk how much they received in respect of a pay rise or bonus is the only way forward as ‘pay’ discussions are cloaked in secrecy - but you’ll need to tread carefully and ask the questions in the right way.
Ultimately, although gender pay gap reporting is a positive step in the right direction, it will not solve the problem. Women will still have to directly challenge their employers if they feel they are getting an unfair deal. The pay gap reporting may fuel that conversation, but that conversation still needs to be had – as equalities minister Nicky Morgan said recently, women across Britain still need to use their position as employees to “demand more from businesses, ensuring their talents are given the recognition and reward they deserve.” The truth of the matter is, not all women will feel empowered enough to challenge their employer in this way.
A multi-pronged approach is required, with education, careers advice, and raising aspirations amongst young women in respect of their careers remaining important, alongside using positive action and tackling unconscious bias amongst recruiters and employers’ attitudes. Until those obstacles are effectively tackled in tandem, the pay and progression gap is likely to continue for some time.