Mind the ‘gender pay’ gap


Mandatory gender pay reporting has been on the agenda for employment lawyers for some time. Originally foreshadowed in the Equality Act 2010, finally draft regulations are now entering the consultation phase and UK employers are gearing up for their introduction later this year.

In general employers are bound to be concerned. 2015 statistical information released by the Office of National Statistics shows that the gender gap is still at 9.4% for full-time employees on a national level.   A sector by sector analysis shows that jobs which are traditionally perceived as attracting a greater proportion of females, such as nursing and midwifery professionals, have the narrowest gender pay gap (at -0.2%), but that occupations where women are generally under-represented, such as financial services managers and directors, typically have a much higher gender pay gap (at 34.9%).

Background to the consultation

In 2015, David Cameron initiated a consultation asking for proposals to introduce a mandatory gender pay gap reporting requirement for non-public sector employers with at least 250 employees.   Draft regulations have been drawn up and once the consultation is finished the provisions are expected to come into force (in their current or in amended form) in October 2016.

What is it likely to mean for us?

Employers with 250 or more employees will be required to publish on an annual basis:

  • the differences between both the mean and median hourly gross pay of male and female employees;
  • the difference in the mean “bonus pay” (broadly defined to include profit share, share awards and long-term incentive plans or schemes) for male and female employees during the period of 12 months to 30 April each year;
  • the proportion of male and female employees who received bonus pay during the preceding 12 months; and
  • the numbers of male and female employees in each of four equal pay bands (based on the employer’s overall pay range).

For employers who do not comply, there are suggestions that they will be “named and shamed”, causing potential public embarrassment and negative publicity.

What should employers do?

  • First, ascertain if your organisation is in scope. The Regulations apply to private and voluntary sector employees in England, Wales and Scotland with at least 250 employees. The Government Equalities Office has indicated that it is the Government’s intention for the Regulations to apply to employees in the wider sense, which would bring LLP members and some self-employed contracts within scope as well as casual workers or bank staff who are engaged directly by a relevant employer.
  • For those in scope, it is not too early to start preparing for the new regime. Our advice would be for relevant employers to:

– create systems for gathering the relevant pay information (note that “Pay” includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and car allowances but does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits;

– consider how many separate gender pay gap reports will need to be produced for their organisation (in the current draft of the Regulations, group companies will not be required to aggregate employees across different subsidiaries and are treated as separate entities);

– analyse which elements of the employees’ remuneration packages are reportable under the Regulations;

– calculate the current gender pay gap information as soon as possible using the method set out in the draft Regulations;

– identify any risk areas that currently exist which could harm the employer’s reputation when the first report is published;

– take steps to deal with obvious disparities in good time before the Regulations come into force; and

– identify the possible reasons for any disparity in pay and consider whether there are any measures which could be introduced to counteract those reasons such as more flexible working arrangements, enhanced maternity benefits or management training to tackle any problems with the culture.

Recent pay differentials published by the Government Equalities Office  

The current gender pay gaps across a number of different sections were analysed in a recent report published by the Government Equalities Office. The report confirmed that the gender pay gap is typically higher for occupations where women are under-represented:

  • Construction and building trade supervisors: 28.1%
  • Financial services managers and directors: 34.9%
  • Health professionals: 20.4%
  • Retail managers and directors: 25.3%
  • Science, engineering and production technicians: 17.3%

In contrast, in occupations where women have been traditionally employed, the gender pay gap is in women’s favour:

  • Nursing and midwifery professionals: -0.2%
  • Hairdressers: -2.7%
  • Secretarial and related occupations: -10.3%

All of this shows that the UK has some way to go in tackling gender inequality in pay. However, it remains to be seen whether the draft Regulations go far enough to make positive and lasting changes to this persistent area of controversy.

Sarah Wilkinson, Associate, Fladgate LLP (sarah.wilkinson@fladgate.com)

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