Mind the Gap! The latest on gender pay reporting
The gender pay gap is an incredibly hot topic at the moment. The fall-out from the BBC’s publication of the pay of its top employees is ongoing, with it only being announced last week that some of the highest paid male stars have agreed to a pay cut to assist the BBC in levelling out the pay for the men and women at the top.
And now with gender pay reports for other organisations starting to trickle through, it will be very interesting to see what the effects are for employers when the differences in mean and median pay are visible for all to see. Although of course the information in most gender pay reports won’t be as specific as the details the BBC was required to publish about its top earners, I strongly suspect that in some cases the percentages may trigger difficult conversations.
As you are hopefully already aware from our previous articles, the first gender pay reports are required to be published on or before 4 April 2018 (for private and voluntary sector employers with 250 or more employees). (There are separate requirements for public sector bodies to publish by 30 March 2018).
According to recent estimates, only 7.5% of the employers who are required to publish a report have done so to date. With only 9 weeks to go, is your report nearly ready? Do get in touch if you need help with preparing the report.
One of the grey areas when the regulations were first published was how enforcement of the rules would work in practice where employers didn’t publish their data as required, or when the data they published was wrong. Initially it seemed that the regime was going to be rather ‘toothless’, until the Government indicated that it would give responsibility for enforcement to the Equality and Human Rights Commission (EHRC). However, little was known about what powers the Commission would have.
The EHRC has now published its draft enforcement strategy (comments are invited by 2 February 2018). Although it says it would firstly try an informal approach and attempt to gain cooperation that way, they would also plan to use the following powers if the informal approach does not work:
- Written agreements with employers who are in breach, with the idea being that other enforcement action is suspended if an agreement is entered into.
- Formal notices for private and voluntary sector employers who have failed to comply with previous written agreements. These would require an action plan to correct the breach, and if that is ignored, it could be enforced via a court order.
- Potentially unlimited fines and summary convictions for employers who do not comply with measures such as court orders and formal notices.
It remains to be seen how successful the EHRC’s enforcement is going to be (and what resources they will be given for it!). According to recent reports from the FT and other sources, there are a significant number of the reports published so far which show figures that are highly statistically improbable, and are therefore likely to be wrong (whether deliberately or otherwise). These include 16 companies where the gender pay gaps for mean and median pay were both 0%, which is incredibly unlikely to be the case. In their defence, the rules for calculation are complex, and it is possible that some of the errors are genuine.
The EHRC say they are going to prioritise dealing with those who have not published a report at all, and then if it has capacity, it will look at those who have published inaccurate data. At the moment, it seems that some employers are taking the view that they can publish inaccurate information and hope that the enforcement regime won’t pick them up on it, at least in the short term.
Part of the problem too is that the gender pay percentages that the law requires employers to report are by their nature a very blunt instrument. Having figures that show a gender pay gap is not unlawful and does not necessarily reflect any bad practice (or that the employer is likely to face an equal pay claim).
Nevertheless, employers will understandably be wary about publishing information that could lead to them attracting criticism in the media (and social media). One of the ways of addressing that, as I recommended in my previous article, is to take up the option of publishing an optional narrative as part of the report, explaining some of the factors behind the percentages and, if applicable, the steps being taken to try and narrow the gender pay gap.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).