Gender Pay Gap Reporting: latest developments
As the deadline of 4 April 2019 for the second annual gender pay report looms, the last few months have seen a flurry of reports and guidance published by the Equality and Human Rights Commission (EHRC), the Government Equalities Office (GEO), the Business, Energy and Industrial Strategy Committee (BEIS Committee) and the government focussed on how best to close the gap.
Last year 100% of employers in scope reported their gender pay gap (GPG) data. Recent research commissioned by the GEO found that more companies have prioritised reducing their GPG and 69% of employers now view closing the GPG as a high or medium priority. So far, about 10% of employers have submitted their reports ahead of the April deadline. However, according to an analysis of those reports by the BBC on 19 February, four in ten companies have reported a wider gender pay gap compared to last year including Kwik Fit, Npower and Virgin Atlantic. It remains to be seen whether this is the pattern that emerges when the other 90% of employers submit their reports.
We look at the recent guidance, best practice for 2019 and the future of gender pay gap reporting.
Guidance and action plans
In December 2018 the EHRC published its report Closing the gender pay gap which was preceded by GEO guidance published in October 2018 Reducing the gender pay gap and improving gender equality in organisations – read more here.
The GEO published two further guides in February 2019. The first, Eight ways to understand your organisation’s gender pay gap, looks at key questions to help diagnose the potential specific causes of an employer’s GPG. It looks at potential areas for improvement from recruitment and promotion to through to termination and the steps an employer should consider where a gender balance is identified so that it can target resources more effectively.
The key questions include looking at:
- Whether people get “stuck” at certain levels by examining the employer’s own organisational structure including their seniority structure.
- Whether there is a gender imbalance in the organisation’s promotions by comparing the gender ratios of those that apply for promotion with the composition of men and women at the grade below.
- Whether women are more likely to be recruited into lower paid roles by looking at the proportion of women applying for positions and whether there are gender imbalances at different levels or grades.
- Whether men and women leave the organisation at different rates by looking at the percentages of men and women leaving each year by seniority level.
- Whether the organisation is doing all it can to support part-time employees to progress and to support both men and women to take on caring responsibilities.
The second guide Four steps to developing a gender pay gap action plan is based on feedback from employers with successful action plans. The four steps are:
- To analyse the data and identify actions by understanding why the organisation’s GPG exists.
- To consult and engage by gaining buy-in from senior people and by involving a wide range of stakeholders.
- To revise, assess and embed the action plan by monitoring and evaluating it so that it can evolve and develop over time.
- To allow enough time for the process.
Best practice for 2019 gender pay reports
Employers who have not yet reported for April 2019 should ensure, prior to submitting their report, that it meets all of the relevant criteria under the GPG reporting regulations. A recent analysis of the reports uploaded so far this year by Paygaps.com found that almost a third had errors. The most common of these were administrative, for example, the reports not being signed by someone sufficiently senior and not providing the correct link to the report on the employer’s website.
In addition, although there is no requirement to include an action plan, the government’s approach through its guidance is to encourage employers to do so as the most effective way of tackling the gap and also to provide contextual narrative to explain the reason for any gap. The analysis by Paygaps.com found that so far this year there has been a 31% increase in the number of employers who have provided some context behind their pay gaps compared to last year. It therefore does appear that companies are recognising how important it is to explain any gaps that could otherwise give a misleading impression. The companies referred to in the BBC’s analysis had explanations for the widening gap, in the case of Kwik Fit a number of senior female employees had left the company and for Npower the widening gap was attributed to more female than male employees opting for a salary sacrifice benefits scheme.
The future of gender pay gap reporting
The government’s response to the BEIS report on strengthening GPG reporting was published in January and confirmed that at present, there is no proposal to change the GPG reporting regime. The BEIS report had called for more to be done, more quickly, to close the GPG and made a number of recommendations.
However, the government response states that the threshold will remain at 250 or more employees, there will be no amendments to require a more nuanced analysis of GPG figures and action plans will not become a mandatory part of reporting. The government is also satisfied with the EHRC strategy on enforcement and does not see the need to clarify its enforcement powers by providing for specified fines for non-compliance - read more on enforcement action taken by EHRC here.
Although there are no plans for an immediate overhaul, the government is under a statutory obligation to review the GPG reporting regime within five years of its introduction, so things may change in future.
In the meantime, there is no quick solution to closing a GPG. As we approach the second reporting date and beyond, employers who are serious about this issue should study the guidance and ensure they have an effective strategy in place to close their GPG. One thing is certain, the remaining reports will be scrutinised by the staff, clients/customers and the press for improvements and for explanations if there is little change or the gap has widened.
For more information, please contact Anne-Marie Balfour.
COVID-19 Vaccination – can an employer make it compulsory for employees?
We review what legal issues to take into account when considering to make vaccination compulsory as an employer.
Linking ESG and Executive Pay
How does a business go about embedding a focus on strong ESG performance into the structures and culture of its organisation?
Amelia Goodwin and Georgina O'Sullivan write for Pharmacy Business on managing employee performance
Why contractors should prioritise performance management of employees as a regular feature of their business strategy.
The UK’s New Skilled Worker & Intra-Company Visa Routes: a closer look
Taking a closer look at the UK’s new visas to assist UK businesses.
Have your say: MAC call for evidence on Intra-Company Visa Route
The MAC, has launched a call for evidence on the Intra-Company Transfer (ICT) immigration route.
Sleep-in workers not entitled to NMW for entire shift
A unanimous ruling by The Supreme Court in the Royal Mencap v Tomlinson-Blake and another case.
Amelia Goodwin quoted by People Management, Home Care Insight and Care Home Management on the implications of the Supreme Court's ruling in Royal Mencap Society v Tomlinson-Blake
The court found that care providers do not have to pay the minimum wage to staff for time that they are asleep but on call during shifts.
It’s all about the data…why has the government delayed hospitality reopening again?
Michael Powner quoted by People Management on the implications of Uber's decision to pay drivers minimum wage
Uber’s rollout of living wage will put further pressure on other gig economy firms to follow suit.
Rose Carey, Kelvin Tanner and Kate Gamester write for Compliance & Risk on navigating the UK's new immigration system
The article highlights the compliance pitfalls and how organisations can adapt to avoid them.
The UK’s post-Brexit rules for skilled workers – Key implications for the construction industry
As a result of the new Points Based Immigration System , UK companies in the construction sector will not be able to sponsor labourers.
How to manage redundancies: employee rights on redundancy
What rights do employees have when a redundancy exercise is carried out?
Michael Powner quoted by Personnel Today on the implications of the Uber Supreme Court ruling on the gig economy
While the case is fact specific, the decision is likely to be a very persuasive authority for tribunals ruling on others in the gig economy.
Michael Powner quoted by Bloomberg, PA Media and People Management on the Supreme Court's ruling on the employment status of Uber drivers
The Supreme Court unanimously found that Uber drivers are workers under UK law.
Nick Hurley quoted by the Daily Mirror on 'no jab, no job' policies
'No jab, no job' may seem clear and concise, but mandatory policies requiring the Covid-19 vaccine are far from straightforward.
How to manage redundancies: practical steps
What are the practical considerations when carrying out a redundancy exercise?
EMI share options, Covid-19, and Brexit – where are we now?
What are the new measures to employers operating EMI schemes that have been affected by the pandemic?
How to manage redundancies: initial planning
What should employers consider when preparing for a redundancy situation?
Post-Brexit Implications for UK/EU Business Travel
How companies need to monitor the activities of their employees on business trips in a post-Brexit world.
Trevor Bettany quoted by People Management on the use of 'fire and rehire' tactics
Trevor Bettany considers questions around the legalities of ‘fire and rehire’ tactics.