Employment

UPDATE

Since we wrote this blog, the government has issued regulations on gender pay gap reporting. Our latest blog is Gender pay gap reporting: 5 tricky issues.

Users of Workbox, the employment team’s online HR site, can access detailed information and advice on our dedicated Gender Pay Gap Reporting page, including advice on how to make all of the calculations and answers to FAQs.

A study by the Chartered Management Institute and XpertHR of over 72,000 managers has found that women in full-time equivalent roles earn 22% less than men. The study looked in particular at the situation at the top of organisations, and showed that the gap is greater at management level than it is across the entire workforce.

This means that, on average, female managers are working for free for 57 days per year – or nearly 2 hours per day. The annual pay gap for a professional role is averages £8,500, and for more senior staff it is £15,000. Even at director level, the report shows that while male directors earned £138,699 on average, female directors earned £123,756. Men’s bonuses were also nearly double that earned by women.

The report also highlights that the gap gets wider as women grow older, ranging from 6% for women aged 26-35, to 38% for the over 60s. This correlates with decreasing numbers of women in senior posts.

The survey’s sponsor noted: “An entire generation has now worked its way through from school leaver to retirement since the first equal pay legislation came into effect in 1970, yet the gender pay gap persists, and many employers still prefer not to know just how bad it is in their organisation rather than getting to grips with the data and doing something about it.

Pay gap reporting?

The UK government aims to tackle the continued gender pay gap by requiring large employers, with over 250 employees, to publish information showing differences in pay between men and women. Under the current plans, businesses with fewer than 250 employees will be exempt. It is thought that hundreds of businesses in Scotland will be subject to the new regime.

A statutory audit is, however, a blunt instrument. It may be many years before the data is sufficiently detailed to apply meaningful pressure on employers. Campaigners advocate a range of other measures including pay transparency and the re-introduction of equal pay questionnaires.

Litigation in the private sector?

In recent years we have seen large numbers of claims against the public sector for equal pay. It has been suggested that we will see more equal pay litigation in the private sector and a small number of employers have been involved in high profile claims in the last 2 years. Reports like the one conducted by the CMI could see that trend increase. Coverage of the subject on social media is also likely to influence employee’s responses.

Time to act?

Employers are sometimes nervous about carrying out comprehensive equal pay audits for fear of creating data that could give rise to claims – a head in sand approach that has, to be frank, worked in the past. It is fair to say, however, that the issue is making its way up the corporate risk agenda and it is time to look at it properly. At the very least employers should get a feel for potential issues and start planning to address them while they remain in control – rather than find that their hand is forced through litigation.

Employment Law

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Employment Law