The gender pay gap: what happens next?

With public appetite for greater transparency around pay, 2018 may be the year when ethnicity pay gap reporting reaches the statute book.

We have now passed the deadline for all public and private sector organisations in Great Britain with more than 250 employees to reveal the difference between what they pay men and women.

In the first pay audit of its kind, one in ten employers that should have reported on their gender pay gap have yet to do so, more than three weeks after the private sector cut-off date of 4 April.

The Equality and Human Rights Commission, which is responsible for ensuring that employers publish their gender pay gap, said it will write to employers who have failed to produce the relevant information and give them 28 days to report. If they fail to meet the extended deadline, they will face an investigation and legal action. Greater pressure may come internally from companies’ own employees and also from scrutiny in the media.

The Government data shows that, of the companies that have reported so far, 74% pay men more than women. About 15% of businesses pay more to women, and 11% of firms said they pay both male and female staff the same. The figures show that a woman working at a large UK firm is most likely working at a company which pays men more than women.

The reporting has not come without its share of criticism, and there are questions being raised around the significance of the data, the point of the reporting exercise, and scepticism over what steps the government will take once the first year of reporting is completed.

Most commentators agree however that the introduction of gender pay gap reporting is having a positive effect on the quality of public discourse and in forcing businesses and the government to act on the more pertinent issues that go to the heart of pay inequality. It appears that gender pay gap reporting is already driving practical changes in employer policies and practices. The need to demonstrate improvement year on year, or to mitigate unflattering figures, has prompted many organisations (albeit a minority) to launch bold new equality initiatives alongside their pay data. For example, some employers have taken the opportunity to introduce dedicated schemes to support maternity returners, or to increase paid leave for fathers in an attempt to reduce pay inequality. The data published so far provides big lessons for both companies and the Government.

Regardless of any flaws that may exist in the reporting process, many hope that gender pay gap reporting will drive transparency, accountability, and action. With murmurings of calls for mandatory reporting to be extended, it may be that soon we look back to see that gender pay gap reporting was just scratching at the surface for addressing inequality across all characteristics in the workplace in the UK.

Ethnicity pay gap reporting? 

More calls are being made, in the press and by politicians, to extend pay gap reporting to ethnicity. The Conservative & Liberal Democrat manifestos at last year’s General Election contained commitments to introduce pay reporting on the grounds of ethnicity.

In August 2017 the EHRC published a research report which found that “broadly speaking, in the period 1993-2014, there had been very little narrowing of ethnic pay gaps and for some groups they have actually increased”. One of the more staggering statistics from the EHRC’s report showed a pay gap between male Bangladeshi immigrants and their white British counterparts of 48%.

The Greater London Authority has this year published the results of its pay audit which has found that ethnic minority workers in London’s public sector face a pay gap of up to 37%.

The Ethnicity Earnings Audit, which covered all organisations in the GLA, found that the pay gap was “particularly stark” within the Metropolitan police, the GLA itself and the two development corporations. Steps being introduced to try to close the gap include anonymised recruitment, which removes names from applications, as well as unconscious bias training and a new diversity and inclusion management board.

This year marks the 50th anniversary of the 1968 Race Relations Act. That made it illegal to refuse: housing, employment, or public services to a person on the grounds of colour, race, ethnic or national origins. With public appetite for greater transparency around pay, 2018 may be the year when ethnicity pay gap reporting reaches the statute book. Watch this space for further developments.

Paul McFarlane (Partner) and William Beverley are members of our London Employment, Pensions and Immigration team. Paul is a board member of the Black Solicitors Network with responsibility for Careers and Development, and is engaged in promoting better diversity and inclusion practices across the legal sector.

We are happy to assist you with any aspect of pay reporting or to provide diversity and inclusion training to staff at all levels of your organisation. To discuss your requirements, please do not hesitate to contact Paul McFarlane (paul.mcfarlane@weightmans.com) or speak to your usual Weightmans advisor.

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