The Gender Pay Gap – Second Year of Reporting

In March 2018, we published an article on the gender pay gap and why it’s not just an issue for big companies. Employers with 250 or more employees are required by law to publish calculations every year showing how wide the pay gap between their male and female employees is. The 2019 reporting deadline is fast approaching. For private and voluntary sector employers the deadline is 4 April. For the public sector, the deadline is 31 March.

While there have been calls for the scope of the reporting to extend to smaller companies (with 50 or more employees, for example), this has not yet happened.

What is the gender pay gap?

The gender pay gap is not the same as unequal pay. Unequal pay is where men and women are paid differently for performing roles which are the same (or similar). It became unlawful under the Equal Pay Act 1970 and was incorporated into and enhanced by the Equality Act 2010. Men and women must be paid equally if ‘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 gender pay gap is the difference in the average hourly rate of all men and women across an organisation. This means that in organisations where women are employed in lower paid jobs than men, the gender pay gap will be higher. Under-representation of women in senior positions will also result in a high gender pay gap.

The question is, will this more transparent approach to gender and pay make any real difference in narrowing the pay gap? The statistics published for 2018 do not suggest any radical changes. The overall median gender pay gap is 11.1 per cent, compared with 11.8 per cent in 2017.

The reality is that unless organisations are proactive in addressing the gender pay gap, little will change year on year.

Companies are not required to plan for how they will address potential gender pay gaps in their organisation – publishing the data is all that is currently required. Providing a narrative on their results is optional. With no real incentive for employers to narrow their gender pay gap, reporting on it risks becoming little more than ‘box-ticking’.

In order to avoid this and make genuine progress in narrowing the gender pay gap, employers need to consider why female employees are not being employed in higher paid, senior positions. They should seek to ensure that women are represented equally and encouraged to progress their careers and develop their skills.

Employers should also consider the implications of their data being publicly available. It can be viewed by employees, customers and prospective staff. If its gender pay gap is wide, an organisation risks appearing outdated and lacking in diversity and opportunity.

As of 1 March 2019 (and bearing in mind that only around 14% of employers have reported so far), the data suggests a slight narrowing of the pay gap in the financial and insurance sector. Nonetheless it remains among the sectors with the biggest pay gaps of all.

While reporting is not yet a requirement for employers with fewer than 250 employees, the gender pay gap is not just an issue for big companies. Smaller companies should also consider monitoring gender pay as a matter of good practice. By addressing the gap head on, employers can develop a workplace culture built on equality that can be evidenced and improved upon where needed.

It may be too early, in only the second year of reporting, to assess the impact of the new legislation. The requirement to report will hopefully put the gender pay gap on the radar for firms, even if it doesn’t currently apply to all organisations. Fundamentally, firms should aim for an inclusive workplace that encourages men and women on an equal footing, where employees are judged on merit not gender.