- Less than one in six employers are concerned that current differences in employee pay may be due to gender
- Yet 70% of employers are concerned employees will question their rate of pay, and four in 10 are concerned that publication of data will lead to equal pay claims
- Nearly half of employers anticipate that they will need help understanding and implementing the new regulations, when published
Less than one in six employers (16 per cent) is concerned that current differences in pay may be due to gender, according to new research1 conducted by law firm Bond Dickinson LLP. The findings reveal, however, that many more are concerned about the implications of new gender pay gap regulations, which will affect approximately 8,000 employers who between them employ around 40 per cent of the working population.
The proposed regulations requiring large private and voluntary sector employers to publish their gender pay gap information were announced by Prime Minister David Cameron on 14th July 2015, a move the government hopes will help to eliminate the gender pay gap which indicates that on average men are currently paid 19.1% more than women2.
Key findings from the research include:
Impact of gender pay gap reporting
Four in five employers (79 per cent) responding to the survey are not concerned that any differences in pay between male and female employees could be for gender-related reasons, with just 16 per cent concerned that their pay arrangements may be influenced by the gender of their employees.
However, 61 per cent thought that the new rules would encourage their organisation to take action to close their gender pay gap, with 70 per cent believing that employees would question the reason for their rate of pay and 42 per cent thinking that formal Employment Tribunal claims would be pursued.
This is interesting in that while relatively few respondents think that gender is a reason for their pay gap, a much higher proportion believe that publishing their gender pay details will prompt positive action to address the situation (including 51 per cent who believe it to be important for them to have a better gender pay gap than their competitors) or cause employees to question and/or challenge their rate of pay.
Significance of grading schemes
The Government appears to be looking at three different options: a requirement to publish an overall gender pay gap figure; details broken down by full- and part-time employees; and details broken down by grade or job type.
Respondents to the survey were concerned that publishing a gender pay gap figure based on an average across their organisation would be too simplistic. Many felt that in order to be meaningful, more complex reporting is required.
However, Bond Dickinson says identifying comparable jobs within an organisation is fraught with difficulty, as it frequently sees when dealing with mass equal pay claims.
Two-thirds (66 per cent) of respondents pay according to a grading system that depends on job evaluation, but only four in 10 believed that employees on the same grade were doing comparable jobs. One in 10 believed that employees on the same grade were not doing comparable jobs and the remaining five in 10 said that employees on the same grade were not doing comparable jobs in all cases.
Lisa Robertson, Managing Associate, Bond Dickinson LLP, said: “With two-thirds of respondents paying according to a grading system that depends on job evaluation, the question of whether gender pay gap figures should be broken down by grade or job is highly relevant. But if employees on the same grade aren’t doing comparable jobs then calculating the gender pay gap by grade may not just be meaningless, but potentially also misleading.”
Understanding the regulations
Almost half of respondents noted that they would welcome help in understanding the new regulations, while significant numbers also noted that they needed help in calculating their gender pay gap (37 per cent), analysing the significance of the result (31 per cent) and addressing the issues identified (29 per cent).
Lisa Robertson continued: “It remains to be seen what employers will be required to publish. What is clear is that each organisation’s gender pay gap will be subject to scrutiny and employers will have to take steps either to address it, or explain it. Employers will be put to a lot of work in analysing and publishing gender pay gap information which is meaningful in the context of their particular organisation, and then deal with the potential fall-out. Whatever the specific requirements, it is worth being proactive; the ostrich approach won’t be a viable option.”
Respondents to the survey raised some key concerns about the implementation of the new regulations, including:
- “Our gender pay gap is driven solely by the fact that there are fewer women at senior levels. It would be preferable to report gaps by grade than by a crude overall percentage that would fuel concern amongst employees that they were not receiving equal pay for the job - which is not the case.”
- “Providing the data is not an issue, but whilst I genuinely believe we do not pay differently according to gender, my concern would be that it would be interpreted as that. Pay differences in our organisation are due to experience, tenure, performance and job role but I can see it might be difficult to explain that to people who might interpret it just looking at gender. It is a good exercise to conduct but I am concerned about what happens next.”
- “A narrative is important – this [legislation] has a real danger of damaging employee relations in organisations. Although more complex reporting would be required, the ability to show reporting by grade/level of post and in full/part time posts would be more useful to all than an overall ‘average’ when demonstrating fair and equal pay.”
Lorraine Heard, Legal Director at Bond Dickinson LLP, said: “Organisations whose gender pay gap is bigger than the national or industry average will need to have an understanding of the reasons for this and be able to provide an explanation. Whilst failing to publish gender pay gap details involves the incurrence of a relatively insignificant fine of £5,000, the attention this draws to the organisation’s position on gender pay could prove to be more damaging than publication would have been.”
Bond Dickinson says organisations should give consideration should be given to the following steps when considering their gender pay gap reporting:-
- 1. Calculate the organisation’s overall gender pay gap on a ‘median’ basis and compare the results to the national and/or industry average. It is important to understand whether the results if published could be viewed as indicative of a significant gender pay problem.
- 2. Consider conducting further analysis to understand the reason for the gender pay differences within the organisation as a whole, or within particular grades, departments, or job roles where applicable. This is clearly more important where the overall pay gap is likely to be viewed as indicative of a significant gender pay problem.
- 3. Consider carefully the reason for the results of the analysis. If there is a good explanation for what would otherwise be interpreted as an unacceptable situation the issue may be one of effective communication.
- 4. Recognising a problem and establishing a means of addressing it may assist to avoid a formal challenge or in defending such a challenge. Care is however required to avoid highlighting a problem in a way that invites a formal challenge.
1 Gender Pay Gap survey carried out online by Bond Dickinson LLP. Respondents were 76 UK based organisations across a multitude of industries. The majority of respondents (54%) described themselves as management, 20% are directors, and the remainder work in other functions such as legal or finance.
2 Office of National Statistics – Annual Survey of Hours and Earnings
