Gender Pay Gap Reporting – what now?

Few people will have missed the Gender Pay Gap Reporting headlines in recent months. But it seems that it wasn’t just a few companies who failed to submit their pay data before the statutory deadline. Some 1,500 companies failed to submit their data on time. Has your company complied? Will companies that haven’t face sanction?
Either way we now have, for the first time, access to a substantial amount of pay data from public and private companies. Now the dust has settled, what can we take from it (or the lack thereof)?

The requirement

Under legislation introduced last year (the Equality Act 2010 (Gender Pay Gap Information) Regulations) 2017) all companies, voluntary organisations and public-sector bodies based in England, Scotland and Wales (but not Northern Ireland) with more than 250 employees have to report the difference in average hourly pay between men and women. The pay gap is expressed as a proportion of men’s earnings. This is the first requirement of its kind and a fairly big shake-up in in what has historically been a very private and guarded matter.

The pay data published

More than 10,600 employers published their pay data. According to the Office for National Statistics, the national average is 18.4%. However, that’s not the full story. Partners and LLP members are not covered by the reporting requirements. Inclusion of this data could make the gap much higher. The data confirms substantial pay gaps in certain industries, such as financial services, aviation and construction. This might be for many reasons but is likely to include: more men at the top; a failure to recruit women into certain levels of the business; or discriminatory practices in pay and promotion. The figures do need to be broken down and understood, for example at Boux Avenue the high pay gap may be because a lot of its female employees are shop workers, whereas those in head office and running the business are more likely to be male:

  1. Ryanair Ltd reported a pay gap of 71.8%
  2. HSBC reported a pay gap of 59%
  3. Boux Avenue reported a pay gap of 75.7%

Employers failing to comply

The Equality and Human Rights Commission (“ECHR” who reported a negative gap of -8.2%!) have contacted employers who didn’t submit data. Those employers have been given 28 days to comply before a notice is issued. Their non-compliance will be published on the EHRC’s website. Rogue employers that continue to avoid the statutory requirement could face summary conviction, an unlimited fine and be forced to publish the data under a court order. Under a Freedom of Information request, the EHRC confirmed it has sent out 1,456 letters and will investigate those who continue to flout the regime.  We are yet to see the measure of any fines imposed; they could be costly to businesses – watch this space.
In addition to hefty fines, damage to reputation and adverse publicity is an issue. Retaining talent could also be affected; employees are now seeking cultures which promote equality, are transparent and fair. Companies tendering for contracts are taking equality statistics into account; they want to work with compliant companies who are taking action to promote diversity and equality.  

The future – claims by employees?

Whilst it doesn’t follow from the statistics alone that there is discrimination, we are likely to see a rise in employees using the data as statistical evidence in support of sex discrimination or equal pay claims – for example, if the data shows a pay gap in the top echelons, an employee may use that to support claims that discriminatory practises are being used in promotion, pay (including bonus) and the “glass ceiling”.
There’s still plenty to be done. With less than 12 months to go before the next set of data has to be submitted, employers should be acting now. There is no quick fix, but strategies should be in place and action need to be taken to eradicate the pay gap, including training among staff on conscious and unconscious bias. Many employers are also introducing training on harassment following the recent #MeToo movement. There is no doubt that the Regulations have raised awareness of issues surrounding women and pay.
You can check how companies fair on the register:
If you should have any queries about gender pay gap reporting and training, or are concerned that there are issues of inequality or discrimination at your workplace, please get in contact with our Employment Team at either our London (0203 440 3705) or High Wycombe offices (01494 451355).