As the deadlines for gender pay gap reporting edge closer, organisations yet to report will be thinking carefully about how they communicate pay disparity, even if their gap is low. What can we learn from those that have reported so far – and how can employers ensure they give out the right message?
Reports this week that Britain’s largest charitable foundation, the Wellcome Trust, has a gender pay gap of 21% may have come as a surprise for many.
Gender pay gap reporting
A statement from its director as the research charity published its report echoed what many organisations who are due to report by the April deadline are probably feeling.
Jeremy Farrar admitted that the figures “inevitably make uncomfortable reading” and that the trust needed to face up its challenges and make changes.
Its report showed that although women make up 64% of the workforce, they were in the minority in the most senior roles, where there was the greatest pay disparity. The most dramatic difference was in mean bonuses, where men earned 78.8% more than women on average. The trust has committed to measures such as gender bias training and new recruitment processes that will expand its pool of talent.
But while such disparity might seem surprising in the charity sector, the Wellcome Trust is far from alone in reporting a significant gap between average hourly pay rates for men and women.
‘Overwhelmingly female’ workforces
One area where the gender pay gap is particularly pronounced is the retail sector, especially in fashion or lifestyle retail. Typically, the majority of shop floor staff are women, while more head office roles are taken up by men.
According to Women in Retail, women make up 60% of retail work, but only 10% of them make it into executive roles.
Of more than 800 companies that had published their gender pay gap at the time of writing, fashion retailer Phase Eight had the largest mean gender pay gap, with an hourly rate 64.8% lower for women than for men.
In its pay gap report, Phase Eight chief executive Benjamin Barnett said its in-store workforce is “overwhelmingly female”, whilst head office staff – whose pay rates are typically higher – are more evenly split between men and women.
“This will cause significant disparity across our results where this imbalance is not taken into consideration. Similar issues will apply to other organisations in the women’s fashion retail sector,” added Barnett.
Closing the gender pay gap
But how do employers reduce or close their gender pay gap without either forcing women into more senior positions simply because of their gender, or cutting wages for male staff?
Employment lawyers say there is no one-size-fits-all solution, and employers must be careful not to focus too much on the figures as they could unwittingly create a case for discrimination claims from male staff.
Gender pay gap reporting deadlines
Public sector: 30 March 2018
Private and voluntary sector: 4 April 2018
One retailer with a relatively narrow gender pay gap compared to others in the sector is Oliver Bonas, which reported a mean pay disparity of 9.6%.
Around 84% of its workforce are women – 91% of whom work part-time – but more than three-quarters of its executive team are female, unlike many of its competitors.
Oliver Bonas said in its gender pay gap report: “We have worked hard over the last few years to encourage more male managers and team members to join our business.
“We are planning on continuing to focus on creating a more balanced workforce across all areas of our business for 2018.”
Helping women to take the next step in their careers could be one way to reduce the pay gap, as John Lewis has found. More than 60% of its lowest-paid roles are taken up by women, compared to 40% at executive level.
In the retailer’s report, which identified a mean pay gap of 13.9%, director of personnel Tracey Killen said it offered an internal interview bank to help staff prepare for the next step in their careers. This is on top of offering flexible working and part-time positions which can support women with young children.
“We would not want to discourage flexible working, so we will instead focus on encouraging both men and women to make the most of flexible working opportunities,” she said.
Although there is no immediate solution to the issue, employers can make a start by carrying out an equal pay audit, according to Adam Pennington, employment lawyer at Stephensons.
It is important to look at pay data closely before concluding staff have been discriminated against, he advised, as issues such as take up of flexible working or differences in working hours may be behind an unbalanced pay structure and therefore a gender pay gap.
According to the law, women are entitled to equal pay for doing the same job or for work of equal value – where a pay audit finds this not to be the case, organisations should remedy immediately. The prospect of Tesco’s £4 bn equal pay claim should act as a warning here.
[Employers should] think about getting together with other businesses. Traditionally businesses were concerned about sharing information, but there is a real opportunity here to address these issues across different sectors” – Andrew Yule
Pennington adds: “If [the employer] looks at the data and finds there is no reason why a male worker is paid more than a female worker, for example if her gross basic salary is less than his despite doing the same job, then the female worker should have her contract changed to align their pay.”
He pointed employers in the direction of the Equality and Human Rights Commission’s five step equal pay audit, which is designed to help businesses with 50 or more employees check whether they are complying with equal pay legislation.
Andrew Yule, partner in the employment team at Winckworth Sherwood, says employers should also look at the distribution of males and females across different areas of the business. “You should look at employment practices to make sure they’re fair and there is no bias in recruitment across teams,” he says.
Yule also warns against positive discrimination and trying to recruit women into male-dominated teams simply because of their gender, and vice-versa. Fairness in pay for maternity, paternity and shared parental leave must also be considered, as well as pay for part time staff.
In sectors where there is a known gender pay disparity, such as retail, Yule advised organisations to come together to find ways that the issue could be resolved.
He explains: “Businesses can view gender pay information by sector on the Government website, which might give them an understanding what their competitors are doing to address the issue.
“They should also think about getting together with other businesses. Traditionally businesses were concerned about sharing information, but there is a real opportunity here to address these issues across different sectors.”
Reporting deadline looms
At the time of writing, only 869 out of the estimated 9,000 eligible companies had published their reports, so there is expected to be a flurry of organisations publishing their gender pay information on the Government website over the next couple of months.
Research conducted by XpertHR last year found that many employers planned to wait until the last minute to publish their gender pay figures, despite having already done their calculations, to avoid drawing attention their data.
There is no clear information on the consequences for those that ignore the reporting requirement, although the Government has threatened to fine organisations that do not report their figures by 4 April. There are also doubts over whether the Equality and Human Rights Commission, which is expected to contact those who fail to publish, has the power to impose sanctions.
Yule says the regulations are fairly toothless in terms of enforcement, with no penalties or sanctions likely to be enacted.
He adds: “This should be seen as an opportunity for employers to put some context around their gender pay gap and explain what is being done to reduce it.
“It takes longer that people think [to put a gender pay gap report together], but I’d strongly advise that any business that hasn’t done it should do so ASAP.”
Pennington warns those that have not published their data to get their house in order, for the sake of their reputation as well as avoiding potential fines or litigation from employees.
He says: “There may be adverse inference drawn from failing to report their gender pay gap. If companies are transparent with their pay there tends to be little criticism, but alarm bells might start ringing for staff if they haven’t published by April.”