The Gender Pay Gap – it only affects big companies, right? Well yes, if it’s just about completing a return that’s required of you by law. But gender differences in pay can have a far-reaching impact on employee motivation and productivity and can also land you in hot water legally if you’re accused of sex discrimination.
The Equal Pay Act has been with us for a long time now – 48 years to be precise. It was enhanced by the Equality Act 2010, which reinforced the principle that employers must give men and women equal pay if they are ‘employed to do work that is the same or broadly similar, rated as equivalent under a job evaluation study or found to be of equal value in terms of effort, skill or decision making.’
The gap has decreased over the years from 27.5% in 1997 (when records first started to be kept) to the current all-time low of 19.1%, but that figure actually illustrates that in real terms a woman, on average, earns around 80p for every £1 earned by a man.
That decrease is great news – unless you’re a woman working in the financial and insurance sector where the gap is – wait for it - 35.2%. Yes, you did read that correctly. The sector has the biggest pay gap of all sectors in the working population according to the Annual Survey of Hours and Earnings (ASHE).
What influences the gap?
It’s a complex area, but there are clear issues.
While girls do at least as well at school as boys (and often better), they tend to be disproportionately represented in the lower paying sectors, such as health and social care. There is also the ‘knock-on’ effect of career breaks to have children, with women often working part-time hours to accommodate child care and, often, care for ageing or sick relatives.
Interestingly, for full-time employees in their 20s and 30s, the pay gap is relatively small, but it increases for full-time employees in their 40s and 50s (think about the recent issues at the BBC).
It is often assumed that women don’t want to work in senior positions, or worse, are not capable. This skews the figures – women make up 47% of the workforce but hold only 34% of senior managerial and directorial positions.
The reality here is that you probably have a completely untapped talent pool in your firm of women who, given the opportunity, could develop and contribute far more to your business than they currently do. They know your business and how it functions, and they know your clients.
Think also about women returning to work after a career break to raise a family: the knowledge and skills required to do this are transferable to your business if you recognise and grasp the opportunity.
Another interesting statistic: in a recent survey carried out by LinkedIn Learning, they found that 94% of respondents would stay with a company longer if it invested in their career development. That represents a substantial potential saving in recruitment costs.
The underlying philosophy in the insurance broking profession when it comes to pay and reward is “he who negotiates hardest gets the best deal.” This may be true, but it won’t be a defence if you are challenged in a tribunal.
It is up to you as an employer to ensure that all your employees receive the same basic pay for the same (or equivalent) jobs.
Don’t forget that even if you employ under 250 people, you can still be challenged in a tribunal for discrimination under the Equality Act 2010 – and the potential award is uncapped. There is also a move to extend gender pay reporting to smaller firms, so now might be the time to get ahead of the issue.