Closing the Gender Pay Gap in your Business

On April 6th this year, employers with 250 or more employees were obliged for the first time to publish gender pay gap information for all "full pay relevant employees" as at the snapshot date of 5th April 2017.This information included the:

• difference in mean and median hourly pay for men and women expressed as a percentage;
• difference in mean and median bonus pay for men and women over a period of 12 months, expressed as a percentage;
• proportion of male and female employees who received bonus pay during the previous 12-month period; and
• proportion of male and female employees in each quartile pay band.

Employers were permitted to produce a written statement to accompany their gender pay information, which many used to explain the reasons for any pay gap and/or what steps they were taking to address it.

Gender pay gap reporting represented a new obligation on employers. It is, of course, distinct from the existing law regarding equal pay, which prevents discriminatory differences in pay between men and women for undertaking the same work, work rated as equivalent, or work of equal value.

Over 10,000 employers reported their gender pay gap information. The results showed that 78% of employers have a median pay gap in favour of men, 8% have no pay gap and 14% have a pay gap in favour of women. Other notable results included the construction and financial sectors reporting some of the largest overall pay gaps (on average 26%) whereas the hospitality/entertainment sectors had the lowest pay gaps (approximately 1%).

Closing The Gap

The requirement to publish pay information is a significant step towards addressing the gender pay gap. Public consciousness of the gender pay gap is expected to increase and therefore employers ignore it at their peril. It is likely to be a key consideration for applicants seeking employment and is also featuring frequently as a consideration in tender processes. Failure to address it could therefore impact on a business attracting and retaining the best talent and winning new work, amongst other things.

The gender pay gap is, however, a stubborn problem. Some commentators have suggested it could take over 200 years for it to be eradicated, if purposeful steps are not taken.In this respect it is important to appreciate the wider causes contributing to the pay gap, as it is by no means an issue employers can solve alone. Women are subject to a number of societal stereotypes that directly contribute towards a gender pay gap developing. Chief amongst these is that women remain principally responsible for childcare. As recent as 2015, the Office for National Statistics released figures showing women were undertaking 75% of childcare responsibilities. There is a correlation between childcare responsibilities and the gender pay gap. The Institute of Fiscal Studies released figures in 2016 which showed an average pay gap of over 10% even before the arrival of the first child, but that the gap continues to gradually rise and by the time the first child is aged 12 it is approximately 33%.

There is also a problem with a lack of women in senior positions, with significantly more men employed in such positions. While an employer can take steps to address this (see below), antiquated views within society and the workplace can perpetuate the problem. Other traditional attitudes regarding the type of work undertaken by women also need to change. There are clear examples of sectors within the economy where women are poorly represented, which are attributable in part to the view that those sectors are not for women. This is something which influences subject choices in education and then ultimately career choices resulting in a lot of women missing out on lucrative high paid jobs. An obvious example are the Science, Technology, Engineering and Maths (STEM) sectors. Although there have been government initiatives to try and increase the number of women choosing STEM subjects at school and undertaking STEM careers, numbers remain low.

Further work is needed therefore to change societal attitudes and without that, there is only so much progress employers can make.

What Can Employers Do?

As with society, if an employer is to eradicate its gender pay gap, it needs to adopt a new approach, with a move away from traditional attitudes and misconceptions. It is therefore vital to get senior management buy-in to embrace this new way of thinking and drive forward changes from the top down. Holding senior management accountable to the extent results are not achieved will help ensure this happens. Without senior management engagement, there is likely to be the lack of necessary impetus to make the required changes and therefore achieve the desired results.

Adopting a new way of thinking will mean things such as addressing any unconscious bias within their organisations, something which is a significant obstacle in the way of change. Most people have unconscious bias and whilst a shift in attitude within an organisation will help reduce this, specific training to increase awareness is recommended, particularly for those who are in a position to recruit or promote.

In addition to overarching changes, employers should also consider specific changes that can be implemented. When doing this, the first step employers should undertake it to analyse their pay gap information to see if there are any causes specific to their organisation. Pay gaps exist for many reasons, some which can be legitimately explained and others easily addressed. Being clear on the reasons for an organisation’s pay gap will inform what steps it is best to take to have the greatest impact.

Once clear on the causes, the next step is to make a plan. Set out below are examples of the types of action that can be taken to address common reasons for a gender pay gap:

1. A new approach to flexible working. As we have seen, women are statistically more likely to have childcare responsibilities and therefore undertake part-time work, which is generally lower paid. Flexible working is a practical way an employer can help address this. Review your existing policies to see if they are fit for purpose. Do you have good uptake and if not why? Can working practices in your business be changed to suit flexible working?
2. Can you do more for parental leavers? Shared parental leave rates are consistently low across employers. This contributes to women being primary care providers and the knock-on effect on the gender pay gap. Therefore consider taking steps to improve awareness and uptake of shared parental leave (for example putting in place competitive shared parental leave packages).
3. Support those returning from maternity leave. What steps are you taking to help women back from maternity leave? A high proportion of women do not return which again contributes to the pay gap. Consider setting up “returnships” or similar programmes designed to encourage and assist those returning from maternity leave.
4. Review recruitment practices. Greater efforts to recruit women into the workplace will help address the gender pay gap. Consider setting targets for recruiting women into senior positions. Ensure job advertising is gender-neutral and consider whether roles are advertised as flexible by default. Implementing a structured scoring system with skills-based criteria will help remove bias (subconscious or otherwise) from the recruitment process.
5. Career progression and pay. Review pay and reward structures ensuring they are underpinned by job evaluations. Think about introducing annual equal pay audits and mentoring/sponsorship schemes; things which can encourage retention and career progression. Ensure those responsible for employee development are aware of the issues and are appropriately trained.

Once a plan is in place, it is sensible to set up review dates as this will help measure progress and ensure an organisation remains on track. Again, this can be a task which is allocated to the senior management team.

Closing the gender pay gap is undoubtedly in an organisation’s best interest and will achieve tangible benefits. Being proactive and putting appropriate measures in place should, over time, reduce the gender pay gap within your business.

If you have any queries, or wish to discuss the points above in further detail, please do not hesitate to contact us.