New legislation will mean firms have to publish how much both male and female employees are paid. Will this be the end of the gender pay gap?
From 2018, all companies with over 250 employees will have to disclose how much they are paying their male and female staff.The idea behind the government initiative is simple – shine a light on pay disparity and tackle gender income inequality.
But how will it work? From 1 October this year, a law will come into force meaning all firms that employ over 250 people will have to publish data – on their own websites and uploaded to a government website – on four areas of pay information: the difference in pay for men and women; the percentage difference between men and women relating to bonuses paid; the percentage of men and women who have received a bonus; and four pay categories, with the number and percentage of men and women in each category also published.
But they will only be required to publish information dating from 30 April 2017 onwards, and will have until 29 April the following year before uploading their first set of data, leaving plenty of time for firms to get their house in order.
In a consultation document on the new initiative, the government said firms estimated that it would take an average of 68 hours to analyse and publish a gender pay gap. Though the government said the time was substantially less for those organisations that provided information about the actual time taken – 22 hours. Either way, it’s going to have an impact on companies in time and cost.
There is currently no legal penalty or fine if firms choose not to comply. That could change between now and the law coming into effect in October, but it gives offenders a way out.
However, David Hession, an employment solicitor at Simpson Millar, says the reputational damage probably isn’t worth the risk. He says: “If a company doesn’t fancy posting pay information, the government will name and shame those employers who don’t necessarily comply. That could detract potential customers or potential employees.”
Lloyd Davey, an employment lawyer at Stevens & Bolton, adds: “Employers are advised to be compliant. It could count against them if they are on the receiving end of an equal pay claim, for example.”
However, Hession says that firms should not go to extremes to be seen to comply with equal pay legislation. For instance, he says increasing rates of pay or appointing women candidates into certain positions on the basis of gender could lead to sex discrimination claims being brought by male employees. He says: “Succeeding under these new regulations is about striking a sensible balance between promoting equality without discriminating against particular groups of employees.”
So, once the new legislation comes into effect, if you’re a female employee looking for a firm that is committed to gender-equal pay, it should be easier than ever to judge. Here, according to Hession, is what you should check to make sure a potential employer is genuinely committed …
Putting things right
There are numerous ways and tools for employers to tackle the gender pay gap. Of course, the most obvious is to increase pay for underpaid employees who do the same job as a colleague of the opposite sex but are paid less. Introducing a clear and transparent pay structure with measurable targets helps employees understand what to expect as their career progresses. Inventive remuneration packages can add real value to an otherwise predetermined pay scheme. Additional perks could include a variety of more untraditional but family friendly opportunities, such as childcare support. Employers should be offering a mix of employee benefits that appeal to both sexes and a variety of family and individual circumstances as a way to attract the best talent. Plus, it will help to dispose of any gender related bias.
Despite the fact that employers won’t be made to explain why a pay gap may exist in their organisation or what action they plan take to reduce the gap, many employers will still be anxious about the thought of having to publish their gender pay details. Even though there won’t be a legal obligation for organisations to explain any salary differences, significant pay gaps could attract unwanted attention. In certain cases, there may be genuine reasons as to why a gender pay gap is significant. For instance, where a company employs a high proportion of female employees who work part-time, or where a significant number of female employees are on maternity pay arrangements. The key is transparency; employers must be able to account for how staff are remunerated. Where employers do have significant gender pay gaps, they should either be able to explain this or put forward some form of action plan to assist in reducing the gap.
Finding out what a role is worth
Undertaking job evaluations is another sensible step for employers. They should be analysing and determining what a role is worth – at which point it becomes evident if any workers are paid differently for equal work. By building a job profile and matching that to a pay scale, it is easy to see who in the organisation falls below or above it, and where there are obvious gender pay gaps. The pay should match the job, not the individual employee.
Sorting out any pay discrepencies
Not all differences in pay will be considered unlawful but action will be needed where the reason for the pay differential is, in any way, gender related. If, during a pay review, differences in salaries appear, the employer should make changes. It is irrelevant whether the discrepancy was deliberate or simply down to poor recruitment and promotion practices. For some builders and contractors, achieving equal pay may have to be a gradual process. Preparing an equal pay action plan, which sets out clear timescales and steps to be taken to achieve them, is a wise step. It is important that firms are realistic in setting these goals; unmet deadlines could prompt complaints and potentially equal pay claims from employees.
Having a diversity plan in place
Construction firms that don’t already have a diversity policy in place should implement one as a matter of urgency. Ideally, employers should carry out some form of equal pay audit prior to any mandatory pay reporting coming into effect. This involves identifying the percentage of male and female employees that exist within a given pay scale. Assuming that roles shouldn’t attract the same salary simply because they involve different tasks is a mistake. For example, an employment tribunal may consider the responsibilities and duties of a science teacher as being similar to those of an arts teacher.
Flexible working is good
Another step that employers should be taking now is to foster flexible working arrangements for employees with childcare commitments. Undoubtedly, female employees often have to balance these commitments, more so than their male counterparts, and where possible these requests should be accommodated. This could apply to female employees currently working part-time who may wish to increase their hours due to reduced childcare commitments.
‘The simple message is things aren’t great for women in architecture and we need to make them better’
This is a great opportunity to take a great leap forward. Unfortunately the new pay transparency legislation only applies to businesses with more than 250 employees, which means only 13 of the top 120 practices in the UK will be obliged to publish. I believe the RIBA should make it compulsory for all registered practices, beyond single practitioners. Making this mandatory could eradicate the real and perceived pay difference in the profession. This information would not only give female architects confidence that they were paid equally, but also the chance to vote with their feet, moving to practices with better records and forcing the remaining employers to address the issue.
Put simply we all have to be better, so let’s start today.
Mark Middleton is a partner in Grimshaw