Mind the Pay Gap

We were recently approached by International Workplace to take a look into the issues around Gender Pay Gap Reporting, and how this relates to Equal Pay.  Alex Kiernan explains more…

Gender Pay Gap reporting and equal pay have been hot topics in the news recently, with some of the UK’s largest employers publishing their pay gap reporting and repeated stories in the media regarding equal pay.  We have recently seen the BBC under fire from senior reporter, Carrie Gracie, who alleged she was paid unfairly compared to male counterparts as well as the likes of EasyJet publishing large Gender Pay Gaps.  Equal pay is nothing new and this should not be confused with Pay Gap Reporting.  With the deadline for Gender Pay Gap Reporting looming, employers should be braced for sustained national conversation around pay and equal rights at work.

What is Pay Gap Reporting?

Taking a step back, it’s important to understand the difference between Pay Gap Reporting and Equal Pay.    In April 2017, the Government announced the requirement for all businesses with over 250 employees to report on their gender pay gap – that is the difference in earnings between male and female members of staff.  These reports need to be published by April 2018.

Equal pay legislation, in contrast, imposes an implied contractual term that essentially requires equality of pay between men and women where they are carrying out similar work, work rated equivalent, or work of equal value – i.e neither gender can be paid more or less as a direct result of their gender.

Equal pay claims usually therefore involve a direct comparison between a woman and a man’s pay where the jobs are the same, equivalent or of equal value.  A published Gender Pay Gap, however, is a broad set of statistics evidencing total salary differences between male and female salaries, irrespective of differing job roles, i.e. the jobs held may be completely different and unrelated.

Companies are required to report their Gender Pay Gap online via a portal of the Gov.Uk website and on their own website. The organisations are required to show:

  • median gender pay gap figures
  • mean gender pay gap figures
  • the proportion of men and women in each quartile of the pay structure
  • the gender pay gaps for any bonuses paid out during the year

Why report on pay gaps?

The Government’s intention in bringing in Gender Pay Gap Reporting is clearly to try and address pay inequality between the sexes.  The theory goes, that by forcing organisations to publicly divulge the figures, they will be under greater scrutiny and encouraged to ensure the pay gap is negligible (or at least improved upon).   The threat of enduring negative press may well be an effective mechanism to kick start some level of change.

Given the potential for negative press, as well as scope for misinterpretation and confusion with Equal Pay Claims, most organisations reporting Gender Pay Gaps have opted to provide detailed explanation documents to accompany their reports.  This is with a view to providing context and an explanation for the differences in pay, which is permitted.

Two of the companies that have recently reported Gender Pay Gap figures provide prime examples of how this context can influence the perception of their reported Pay Gap:  EasyJet and Phase Eight.  EasyJet’s pay gap shows men being paid 51.7% more than women, which on the face of it appears extreme.  However, Easyjet have sought to highlight the large difference in Pilot pay compared with Cabin Crew pay.  Easyjet point out that it is a fact that the large majority of people qualifying as Pilots are male, and a large proportion of Cabin Crew are female, and it’s a fact that Pilots are paid significantly more than crew.  Easyjet state that this results in an artificially high and misleading Pay Gap, as what the Pay Gap Reporting fails to do is identify the gap between people doing similar work.  The same can be seen for women’s fashion store Phase Eight, where a largely female shop floor staff is compared to a more mixed head office staff.  Phase Eight state that if you look at just the Head Office staff, the gap is much smaller.

What this points to is that we still have problem at a societal level, where some jobs are more traditionally ‘male’ and others ‘female’.  Introducing Pay Gap Reporting, however, is not going to be the mechanism that drives this fundamental change.

So, what’s the future?

It’s likely that this is only the very beginning of both the scope of Pay Gap Reporting, and the impact it will have.  The naivety of the reporting requirements will in no doubt cause reputational damage to many organisations, and will cause a raft of ‘positive discrimination’ measures, as they look to close the gap before next years’ reporting cycle.  It is likely that the Government will extend the reporting requirements to small organisations, and potentially even extend the scope of reporting to cover other protected characteristics such as race and disability. What’s definite is that the media conversation around equal pay is not going away, and Gender Pay Gap reporting is only adding fuel to the fire.

If you’re in any doubt about Pay Gap Reporting, or whether you’re at risk of equal pay related claims, we recommend you speak to a specialist Employment Lawyer.  Here are Loch Employment Law, our award-winning lawyers are able to provide expert advice and guidance on your employee contracts and pay, and can ensure you are not exposing yourself to any unnecessary risk of future claims.

 

Alex Kiernan is a Partner at Loch Employment Law.  If you need help understanding your Pay Gap Reporting requirements, or have questions about Equal Pay, we’re here to help.  Get in touch with the team on 01892 773970 or send us a message

This article first appeared on International Workplace, and is reproduced here with permission.