More than four decades after the Equal Pay Act, the gender pay gap still stands at about 19%, with the average British woman earning around 80p for every £1 earned by a man.
In October 2016 the Government will introduce Regulations that require all companies with 250+ employees to carry out a gender pay review, and publish their data. This has implications for the company’s reputation, its ability to attract and recruit staff and could also trigger equal pay claims from existing staff.
The Regulations will make changes to the Equality Pay Act 2010, and aim to “end the gender pay gap in a generation” (David Cameron). They will take effect from 1 October 2016 with the first reports needing to be published before 30 April 2018 and then annually by 29 April.
Has your company ever carried out an equal pay audit? Do you know what your issues are and are you taking steps to resolve them? If not, we strongly recommend that you consider carrying out an Equal Pay Audit this year ahead of the compulsory reporting dates so that you are not caught by surprise and can address issues early on.
A confidential Equal Pay Audit will:
- Review and analyse gender pay
- Identify any gaps and risks
- Examine which objective justifications exist
- Make recommendations for resolving areas of high risk.
Facts and Figures
The UK’s gender pay gap currently stands at 19.1% (Office for National Statistics, 2014) – forty four years after the Equal Pay Act was introduced – and lags behind the rest of Europe on 16.4%.
The new duties apply to private and third sector employers, employing 250 or more staff within Great Britain, and include limited companies, LLPs, statutory bodies and unincorporated associations.
Employers will have to provide and publish five items of gender pay information: the mean and median gender pay gap, the mean gender bonus gap, the percentage of men and women in the bonus scheme, and the distribution between men and women in salary quartiles.
The September 2015 Business in the Community Survey reported that 89 per cent of employees said they would feel more negatively towards their employer if the gender pay gap was relatively large in their organisation.
However if it was relatively small, 71 per cent would feel more positively towards their employer.
Do employers intentionally pay women less than men?
Not they don’t do this intentionally but they can often do it unconsciously. Men are often much better at negotiating when they join an organisation. Women have the expectation that if they work hard and are good at their job so they will be fairly rewarded. Whilst this is true it is extremely rare for an employer or HR professional to review salaries with gender in mind. If someone is earning less than they could or should, this is seen as operationally savvy and commercial. Good management even.
We have reviewed many employer data sets and observed stand out discrepancies which are explained away as historical, personality or line manager driven and as such no longer issues. However if an organisation is paying a woman or women less than men in equivalent roles for no tangible reason, this will not only need to be rectified urgently but could result in resignations and a damaged employer brand and/or Employment Tribunal proceedings.
Benefits to the organisation
Pay is at the heart of the employment relationship, it influences how valued an employee feels and can act as a powerful demotivator if you get it wrong.
As an employer you will need to go public with your data, publish it on your website and upload it to a government website.
It is worth looking at the information early to assess what risks you are carrying and what measures need to be put in place over the next year to two before the first reports are published. Carrying out an audit now will help you comply with the law and good practice.
It is important that you feel confident that any analysis has been carried out reliably and that valid defences are understood or that indefensible issues are tackled so that you have fair, rational and transparent pay for your employees.
Understanding your risk profile and the measures to reduce these risks will protect your company from reputational and financial risks.
How we can help?
Amelore can conduct a gender pay audit and provide you with a report and recommendations now so you can address any issues before this legislation takes effect.