All bark and no bite?
27 November 2017
This article was featured in the December 2017/January 2018 issue of the magazine.
Sarah King, specialist employment lawyer at Excello Law, contends that the Gender Pay Regulations are effectively toothless
The Conservative party’s promise on the gender pay gap in its 2015 general election manifesto said: “We will require companies with more than 250 employees to publish the difference between the average pay of their male and female employees.” Two years on, the manifesto had one notable amendment: the commitment requiring companies to publish the difference between the average pay was replaced by a more nebulous “more data on the pay gap”.
Although the gender pay gap has been steadily shrinking over recent years, progress is too slow. A recent report from the University and College Union showed that the gender pay gap among UK academic staff will not be closed until 2060 at the current rate. Since 2015, the pay difference between male and female academics at UK universities has only closed marginally: from 12.6% to 12%.
According to the Office for National Statistics, women earned 18.1% less than men in 2016. However, in predominantly female industries such as sales and customer services, the workforces show a smaller gap. Two key factors affect the data: there are fewer women in senior roles in many industries, and the numerical gender gap of those employed part time – roughly two million men compared to nearly six million women.
...for any legislation or regulations to work effectively, they need to have real bite.
Nevertheless, the government rightly recognised that more needs to be done. In 2011 the government attempted to address the issue through the voluntary Think, Act, Report scheme (https://think-act-report.campaign.gov.uk/). While nearly 300 companies signed up to participate, only seven published their gender pay gap information: the scheme was therefore a failure.
After the failure of the voluntary scheme, new regulations came into force in April 2017 requiring all private and voluntary sector employers with at least 250 employees to report on gender pay. It is estimated to impact nearly 8,000 employers and 11,000,000 workers. Affected employers must publish the following four measures each year:
The difference between the average (mean and median) hourly rate of pay for male and female employees (excluding employees being paid at less than their usual rate because of maternity leave, for example).
The difference between the average (mean and median) bonuses paid to male and female employees over the period of twelve months ending with the ‘snapshot’ date of 5 April.
The proportion of male employees and female employees who were paid bonuses in the same twelve-month period.
The proportions of male and female employees in each of four pay quartiles of the employer’s overall pay distribution. This will show how the gender pay gap differs across the organisation, at different levels of seniority.
There are no civil enforcement measures contained within the regulations; therefore, the risks to non-compliant employers will be largely reputational. Those who must publish their data must do so for the first time by April 2018 but with six months to go so far only a handful of employers had done so.
The data will appear on the employer’s website and remain available for three years along with an optional narrative explaining the reasons for any disparities, and setting out what action, if any, they plan to address them.
The government has also indicated that it would establish a database of compliant employers and closely monitor compliance levels. Whether this will lead to naming and shaming like those breaching the national minimum wage remains to be seen. Some commentators have also criticised the failure to require employers to show their calculations leaves them open to abuse.
The explanatory note to the draft regulations suggests that if there was a breach of the Equality Act 2010 for non-compliance, then this would be subject to enforcement by the Equality and Human Rights Commission. But this is legally incorrect given that the Act also says that the regulations themselves may contain enforcement powers although they failed to deal with enforcement. They are all bark and no bite.
One way to rectify this would be to require businesses to conduct full pay audits or to fine those who do not play by the rules.
Whether there will be test cases by the Equality and Human Rights Commission under the Equality Act 2010 remains to be seen. There are far bigger concerns to address than a failure to report on gender pay. It may, however, be cogent evidence for a Tribunal to consider in equal pay claims: where the employer does not comply with the regulations, they may draw inferences from this conduct.
The Conservative manifesto commitment that companies be required to publish ‘more data’ does not automatically deliver more transparency, or guarantee greater gender pay equality. Although it may be a step in the right direction, for any legislation or regulations to work effectively, they need to have real bite.
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*content correct at time of publishing