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Private sector employers with more than 250 employees must publish their Gender Pay Gap Report by 4th April 2019. This is the second year of the operation of the new regime. With the deadline fast approaching, companies who made commitments to narrow the pay gap following the first round are called upon to evidence their progress through results.

Gender pay gap reports indicate the difference in average pay between men and women within an organisation and their publication aids comparisons across different sectors and industries. For a full explanation of the concept see previous Stronachs Insight:

Each organisation’s report must be published on the Government Website and show the proportion of men and women in four pay bands, disclosing information on mean and median hourly rates and bonuses.

Last year’s statistics (based on figures compiled in 2017) revealed the median pay gaps identified to be 78% in favour of men and 14% in favour of women with 8% of organisations reporting no gap. With some reports submitted in advance, the BBC have recently reported that 4 in 10 private companies have wider pay gaps than last year. It remains to be seen whether an overall reduction will be achieved come deadline day.

Narrowing the Gap

The gender pay gap in any one organisation is not simply a reflection of what action employers may or may not be taking to address the issue but is also illustrative of wider trends within society. The reporting requirements have however placed pressure on employers to be seen to be taking all steps possible to reduce the gap within their individual organisations. Ahead of the deadline, the Government’s Equalities office has published guidance on understanding the pay gap and steps that could be taken by organisations to reduce it. 

The guidance provides information on ‘Effective Actions’ being measures which have already been tried and tested. They include the following recommendations to employers:

  • Include multiple women in shortlists for recruitment and promotion (as shortlists with only one woman as a tick a box exercise do not increase the chance of a woman being selected).
  • Use skill-based assessment in the recruitment process, for example, asking candidates to perform tasks that they would be expected to perform in the role they are applying for and standardise the tasks to ensure fairness, rather than relying solely on interview. 
  • Use structured interviews for recruitment and promotions as a structured process makes the influence of unconscious bias in decision making more difficult. For example, prospective applicants could be asked the same questions with the responses being graded using standardised criteria. 
  • Encourage salary negotiation by showing salary ranges. If salary ranges for roles are communicated, this may encourage women to negotiate their salary as they know what they can reasonably expect.
  • Introduce transparency to promotion, pay and reward processes - if there is transparency in the processes for decision making then employees can see that managers’ decisions are objective and evidence based.
  • Appoint diversity managers and/ or diversity task forces. This can reduce unconscious bias in recruitment and promotion as decision makers are aware that decisions will be reviewed.

Getting the Narrative Right

Following the snapshot date last year there was a wave of negative media exposure for those organisations revealing large pay gaps. The pressure will of course increase this year for those whose figures have remained the same.

If your organisations’s figures reveal a large pay gap, it is useful to be able to provide an explanation with the data, rather than in response to negative comments or feedback. Last year, many companies attempted to justify the gap by explaining that it was not due to an equal pay problem, rather the fact that the top positions were dominated by men with the lowest earners being women. This comes as no surprise when we are exposed to statistics such as that recently revealed by the Independent - that there are more men called “David” leading FTSE 100 companies than there are women.

A more constructive way to demonstrate commitment to change may be to publish an action plan alongside the report. Around 50% of those reporting last year outlined the measure they were taking to tackle the gap. The Government has published a four step guide to developing a gender pay gap action plan. The steps include:-

  1. analysing data and identifying actions
  2. consulting and engaging with senior leaders and stakeholders
  3. revising, assessing and embedding the action plan, and
  4. allowing enough time for the process, appreciating that closing the gap is an ongoing and interactive process.

Comment

The Government guidance is certainly a useful starting point for devising strategy in this area. The organisation’s culture should be considered alongside this and whether it is attractive and inclusive to women. For example, is it considered that not working overtime (due to childcare commitments) is indicative of a lack of commitment with the result being that the progress of working mothers is inhibited? Does unconscious bias exist in the workplace? Are female leaders visible to other employees?

In considering this guidance with a view to taking positive action, employers should remain mindful not to treat women more favourably than men for the purpose of reducing the gap as this may result in exposure to discrimination claims from men. For instance, the answer to appointing a greater proportion of women into senior roles is not to exclude men in any way. Instead, in order to stay in line with the requirement of the Equality Act, adverts could be tailored and target marketing employed to better encourage female applicants.

It appears to be becoming increasingly important for reputational purposes to ensure that the gender pay gap is closely monitored within your organisation. Should a report reveal problem areas, employers should consider tackling these quickly and efficiently with an action plan devised and published with the report, to ensure progress before the next snapshot date. To have a gender pay gap that is gradually narrowing year on year will no doubt increasingly be seen as powerful evidence of a flexible, dynamic and inclusive workplace.

If you would like to discuss any of the points raised above please contact a member of our Employment Team.

Rosie Allan, Trainee solicitor

Chambers Leading Firm 2019

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