Six Years – No Progress

On 4 April, the deadline for gender pay gap reporting passed for private sector employers. Analysis of the 2022 data suggests that despite these reporting requirements being mandatory for employers with more than 250 staff since 2017, the median gender pay gap has not reduced. The government’s push for gender pay equality has therefore failed to deliver any significant decrease in the gap between the wages of male and female employees.

The Data

The data shows that 79% of employers across all sectors still pay male employees more than women, which suggests that forcing employers to be transparent with this information has not led to positive action or change. This can be seen from the gender pay gap figure of 9.4%, based on the difference between the pay of middle-ranking men and women, which is the same as it was in 2017.

The sectors with the largest gaps in gender pay are finance and construction, which both pay their female employees an average of 22% less than male employees. For the finance sector, progress in this respect has been slow, with only a 0.4% close in the gap in the last years six years. However, the construction sector has fared a little better, having achieved a 2.6% decrease over the same period. The legal sector also shows much room for improvement as, although the sector comes in below the British average, the top five UK law firms have an average gender pay gap in excess of 50%.

Conversely, there are some businesses who have succeeded in reversing their gender pay gaps in favour of women, some notable examples being DHL and Airbus, who reported paying female employees 12% and 17.7% more, respectively.

What does this mean for employers?

It is important to note that the gender pay gap data reflects the average difference in pay between men and women across all workforces, which will not automatically reflect gaps in pay between male and female employees performing the same role. The distinction is important as the latter of these forms the basis upon which an individual may bring an equal pay claim against their employer. Further, if a female employee is treated less favourably by being paid less than a male employee, in relation to contractual pay, this may also give rise to a claim of sex discrimination.

To this end, when reviewing their gender pay gap data, employers should be mindful of any specific difference in pay between men and women in comparable roles. Should any such differences come to light, employers should seek legal advice in order to protect themselves from the legal risks and/ or the considerable commercial damage to their reputation. One of the most concerning legal risks for employers in this area is the potential of an equal pay employment tribunal claim, which could result in the employer being ordered to complete and publish an equal pay audit of their entire UK business for the previous three years (for further information on this, please see our article on the Stacey Macken v BNP Paribas equal pay claim here).

What can employers do to close the gap?

There are a number of different steps employers can take in order to decrease their gender pay gap and improve gender equality in general. For example, employers can undertake regular equal pay audits and publicise salary levels when advertising for job roles, which will show a commitment to removing gender inequality in pay. Indeed, the European Council has recently adopted the Pay Transparency Directive which will make salary reporting mandatory across the EU.

Additionally, putting more objective and measurable bonus schemes in place will help employers to decrease the gap when awarding bonuses to its employees. This is especially relevant in the finance and construction sectors where bonuses are traditionally paid on subjective criteria, which serves to push up the average in the sector considerably, as seen above. Indeed, BNP Paribas’ subjective bonus criteria was one of the key factors in the Stacey Macken sex discrimination and equal pay claim mentioned above.

Other steps which may be taken include:

• Reviewing family friendly policies to ensure that both mothers and fathers are offered the same enhanced leave.
• Offering flexible hours without the requirement for part time working, allowing employees to work their full-time hours outside of traditional working times.
• Providing regular training on discrimination and unconscious bias for hiring managers, line managers and other individuals with input on salary and bonus levels.

Clearly, applying a combination of these steps will show further commitment to action and increase the likelihood that the business will see a decrease in its gender pay gap in the future.

Conclusion

The lack of progress over the past six years is clearly disappointing and has likely played some part in the government’s decision against proceeding with a similar mandatory ethnicity gap reporting regime, on the basis that employers tend to hold less complete data on ethnicity than gender. Despite this, those businesses that have reversed the gender pay gap in favour of women provide some much-needed proof that mindsets are changing, albeit slowly, giving some hope for improvement in the future if employers are serious about taking action to close the gender pay gap.

For further information, or to discuss any of the points raised in this update, please contact our Employment Group on 0118 977 4045 or employment@herrington-carmichael.com.