I have been talking to businesses about the new Gender Pay Gap reporting regime for several months now. In short, the new law means that companies with at least 250 employees are required to publish data on the difference in pay between men and women in their organisation. If you would like a (free) seminar on how to comply with your obligations, please get in touch to discuss your requirements and we will be happy to help.
If you had 250 employees or more on 5th April 2017 you have until 4th April 2018 to calculate and publish your data.
Many businesses will find that, on average and across all of the roles in their organisation, the men are paid more than the women. Nationally the difference is about 20%. A national average, across many different industries and jobs, does not give us much in the way of clear or accurate information. The number also varies hugely if you look at the statistics by age, as many women leave the workforce to look after children. The new regime on gender pay gap reporting means that individual employers (i.e. the very people who can do something to fix it) are required to give what will hopefully be much more accurate and helpful data.
That said, the Fawcett Society reminds us how the gender pay gap can be interpreted in their annual Equal Pay Day campaign which is always well-covered by the press. They say that the current gender pay gap means women effectively stop earning relative to men on a day in November – it was 10th November this year – and therefore work the next 51 days for free.
Bear in mind that a gender pay gap does not mean you are breaking the law, but you might want to look at ways of closing the gap. As employers start to publish their data, most are explaining why there is a gap and setting out the steps they are taking to close it. It may take years and require significant changes within your organisation but when you publish your data is there anything you can do now to show you are taking action? Here are some ideas.
1. Enhance maternity pay
Enhanced maternity pay is an easy and relatively cheap benefit to introduce to support female employees, even for new or small businesses. However, it is also very common for there to be no such scheme in place. Without a scheme, a mother will be entitled to the first six weeks at 90% of her usual pay and then up to a further 33 weeks at £140.98 (currently) – provided she has been in the job for about 9 months when she gives birth. Those who work for large employers and in the public sector tend to do much better than most. However, in my experience offering a relatively modest enhancement on top of the statutory minimum should place you ahead of many other businesses and help to show that you support your female employees. I have seen it questioned, at least anecdotally, as to how many female employees would choose their next employer simply because of this benefit but by assisting new mothers financially they may be more likely to return and remain loyal to the business.
Another consideration is whether or not you want to make any enhancement subject to a “clawback” provision, which provides that an employee must return to work after maternity leave for a certain period of time or else they must repay the additional amounts.
Should you also enhance shared parental pay? The question is being asked of the tribunal system at the moment – the two cases are Ali v Capita Customer Management Limited and Hextall v Chief Constable of Leicestershire Police – so we may have more clarity on the legal position soon. Shared parental leave is still relatively new but the intention is that both parents can share the time off work during the first year of the child’s life. Although it is also available to same-sex couples, if more men take up this opportunity then the mother may be less likely to take time off from her career. The change may not directly impact on your own pay data (unless both parents work for the same employer) but it may help with a cultural shift towards women taking less time out to have children. In turn this could promote the recruitment and promotion of women as employers make fewer damaging assumptions about the time women take out from work to have children.
2. Pledge to think differently about flexible working requests
A significant factor in the gender pay gap is women not returning to the workplace after having children. Sometimes this is personal choice, sometimes not. It is common for a mother returning from maternity leave to ask for a change in their role, their working hours or even their place of work to accommodate their childcare responsibilities. The law does not really help here as mothers have no right to return to a different job – only the same job as before, at least in most cases. Most employees (male and female) have the right to submit a formal flexible working request but the law affords employers a lot of room to say no. I find that managers are often reluctant to change a long-established way of working; usually full-time, 9 to 5, with overtime when required. Thinking about how you can make the change work and its benefits, rather than looking for ways to say no, should help keep valuable talent in the business rather than losing those predominantly female employees who may not be able to balance work and childcare otherwise.
3. Change the way you carry out pay reviews (and promotions)
As I discuss this issue with businesses and read the commentary in this area, a recurring theme keeps arising – women do not ask for as much money as men. Paying men more simply because they have asked for it will only make your gender pay gap worse. At least in larger organisations, it might be possible to introduce a system which allows pay reviews to be carried out anonymously, especially if they are based on objective data such as sales figures or the performance of a particular section of the business. Looking at the way you promote should help too. Affinity bias means that people are more likely to recruit and promote those who are like them – so ensuring a diverse management team when making such decisions should help.
4. Help with childcare
The cost of childcare, especially in London, means that returning to work often does not make sense financially. The government provides some financial assistance but could you do more?
5. Pay women more
An obvious one – but also one to be taken with a note of caution. A gender pay gap does not necessarily mean you are paying women less than men for doing the same job, which would be unlawful under discrimination law. For example, Easyjet has a large gender pay gap across its organisation because the higher paid pilot jobs are predominantly filled by men, whilst most cabin crew are women. There is nothing unlawful about that and Easyjet have not increased cabin crew salaries to match the pilots. Instead they have focussed on attracting more women to careers as pilots – such as Kate McWilliams who was 26 when she started. That said, increasing female pay can work, just see the example of marketing company Brainlabs which got a lot of press for the action they took.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.