Slow Progress for the Gender Pay Gap

Over the past few weeks, the Gender Pay Gap reporting deadlines passed in the UK. However, despite the headline figures suggesting that the gender pay gap is now at the lowest level since gender pay gap reporting became mandatory, there are indications that progress is not being accelerated by the reporting process, as originally hoped.

What is the Gender Pay Gap?

In the UK, the Gender Pay Gap Regulations require employers with 250 or more staff to disclose their gender pay gap data. In 2017, when the government implemented the regulations, it was confirmed that the gender pay gap was already at a record low of 18.1%. At the time, mandatory reporting was heralded as a key part of the government’s efforts to eliminate the gender pay gap and ensure that women had the same opportunities as men to fulfil their potential in the workplace.

The gender pay gap is calculated by comparing median hourly earnings of full time male and female employees across an organisation. Critically, gender pay gap reporting does not adjust for factors such as seniority and just looks at averages across the company. However, the wide scope of the data is by design, as the object of gender pay gap reporting is to address systematic and structural inequalities in the labour market which result in overall lower earnings for women compared to men. It is not designed to ensure women and men are paid the same on a specific comparison basis, that is protected by equal pay legislation.

The latest gender pay gap data indicates that that there was a 9.1% gender pay gap for full-time employees, which decreased from 9.4% in 2022. However, on average women are still being paid 91p for every £1 a man earns and there is no indication that the mandatory reporting has markedly accelerated the elimination of the gender pay gap. Indeed, the TUC suggests that it will still take over 20 years to eliminate the gender pay gap altogether. There are several reasons for the disparity not reducing more quickly, chief among them that women are more likely to work part-time due to caregiving responsibilities.

The construction sector’s median pay gap in 2023 was 22.8%. Keller and Mace Construct reported that just 5% of women were among the highest paid in the business. Balfour Beatty reported that just 20% of women received bonus payments in 2023, compared to 37% of men. The gender disparity within this sector remains an area for improvement.

By comparison, in 2023, the finance and insurance sector reported a median pay gap of 21.5%, which is significantly higher than the broader UK market. In fact, the 2023 results from Goldman Sachs reached headlines recently as their gender pay gap reached 54%, the highest reported since the information was first gathered. The figures reflect that women continue to be under-represented in higher earning brackets there. More broadly, research suggests that among CEO positions in the UK, women are outnumbered 17 to 1. Clearly then, this is not just an issue for the FS sector to deal with alone.

However, the presence of a gender pay gap does not necessarily always mean that women and men are paid differently for the same job. In fact, it is entirely possible that a company can have a large gender pay gap and be paying its employees equally for doing equal work. Likewise, it is conceivable that a company could have a negative or zero gender pay gap and have an equal pay issue.

Why is Equal Pay different to the Gender Pay Gap?

Equal pay is the legal right for employees, regardless of their sex, to be paid equally for performing equal work. It focuses on ensuring that men and women receive the same salary for equal work within the same organisation. This will apply to employees performing the same or a similar role, or completing work that is equivalent or of equal value. The Equal Pay Act 1970 and the Equality Act 2010 prohibits wage discrimination based on sex. Practically, this gives a specific statutory right for employees of the opposite sex to be paid equally for equal work.

Whilst, it is, of course, unlawful to pay an employee less than another employee because of any other protected characteristic under the Equality Act, there is currently no specific equal pay legislation for other protected characteristics in the same way as there is for sex. Although that may soon change, as the Labour Party has indicated that it plans to introduce further measures in respect of equal pay legislation to cover race and disability in the event they win the next election.

What Employers can do to help close the Gender Pay Gap?

There are several strategies that employers can implement to help reduce the gender pay gap and to address any potential issues with equal pay for equal work. These include:

  • Disclosing salary ranges for positions within the employer to ensure transparency and prevent disparities based on gender.
  • Conducting regular pay audits to identify and address pay gaps between men and women.
  • Using diverse interview panels to promote diversity and inclusion.
  • Advertising and offering flexible working, full-time or part-time, unless there is a strong business case not to.
  • Drafting job descriptions using inclusive language.
  • Establishing criteria and benchmarks for salary determinations to prevent biases.
  • Implementing unconscious bias and other training for recruitment and promotion processes.
  • Implementing universal parental leave policies that offer sufficient time off and pay for both mothers and fathers, encouraging a more balanced distribution of caregiving responsibilities.
  • Fostering a culture of pay and gender equality and encouraging open dialogue between employers and employees.

At the current rate of progress, it will take over 20 years to bring the pay of men and women into line. For employers, whether you’re reporting your gender pay gap data or just monitoring for equal pay issues across your organisation, it is essential to deal with the ongoing challenge of pay inequality and implement successful policies to tackle the issue.

How we can help 

Gender Pay Gap and Equal Pay issues can be intimidating, particularly when the cost of getting these issues wrong can be both financially and reputationally significant. If you need any assistance with:

  • Understanding and complying with your equal pay or gender pay gap reporting obligations;
  • Analysing or building a framework for an equal pay audit and analysing material factors to explain pay discrepancies;
  • Building a narrative to accompany your gender pay gap data;
  • Reviewing and updating your contracts or policies to reflect equal pay best practice; or
  • Defending or safe-guarding your business against a potential equal pay claim;

Then please contact us.  Alternatively, for further information or to discuss the issues raised within this case, please contact us to speak to a member of our Employment Team.

Alex Harper
Senior Solicitor, Employment
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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