Comment: New proposals on gender pay gap unlikely to work

We are still a long way from gender equality in the creation and growth of companies, but in the past ten years there has been a slow increase in the number of women entrepreneurs receiving funding. Picture: PA
We are still a long way from gender equality in the creation and growth of companies, but in the past ten years there has been a slow increase in the number of women entrepreneurs receiving funding. Picture: PA
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PLAN to end inequality lacks real teeth, writes Amanda Jones

The Equal Pay Act 1970 was implemented in 1975. Despite that, official statistics show, on average, women still earn 19 per cent less than men.

Recent research has also found the gap tends to be higher in occupations in which women are under-represented, and operates slightly in favour of women in occupations where they are over-represented. In 2014, the prime minister pledged to “end the gender pay gap in a generation”.

The government initially sought to encourage employers to address the issue on a voluntary basis. The ‘Think, Act, Report’ initiative, encouraging companies to report voluntarily on any gender pay gap, was spectacularly unsuccessful.

The government has now published proposals to make reporting mandatory in certain circumstances. As ever, the devil is in the detail, and there appears significant scope in the new law for those who wish to avoid the issue.

The proposals will require private and third sector employers with at least 250 employees to publish an annual report showing the overall gender pay gap in their organisation. The report should also include information on the gender balance in each of four salary quartiles, based on the overall pay range. Finally, employers will have to publish any ‘gender bonus gap’ and the proportions of men and women in receipt of a bonus.

The timing means employers will be required to have a snapshot of gender pay gap data prepared for 30 April 2017 and publish a report within 12 months of that date.

However, there are no sanctions for publishing inaccurate or misleading data; no requirement for any independent oversight of the figures reported, or the detail of reports and the way they are compiled; and there are no financial penalties even for those that ignore the requirement to report altogether. Therefore, while the proposals are to be welcomed, it is difficult to see on what basis they are likely to be successful.

Also, only employers with more than 250 employees are included and there is no requirement to aggregate subsidiary companies. As the vast majority of employers have fewer than 250 employees and many larger companies do not operate as a single entity, relatively few employers will be affected.

Secondly, the definition of ‘pay’ is narrow and doesn’t include overtime or expenses. The definition of ‘bonus pay’ seems ambiguous and it isn’t clear whether this will include deferred payments or other benefits such as share options.

The experience from tribunals is that equal pay claims are difficult to establish, not least because of the abolition of the statutory questionnaire procedure which allowed employees to ask specific questions about their employer’s pay practices.

Therefore, it seems likely that the opportunities for obfuscation in the reporting mechanism mean those who want to continue to brush this issue under the carpet will be able to do so.

What weakens this new initiative most of all, however, is the lack of real sanctions.

If the government is serious about eradicating the gender pay gap, bolder steps are needed. This latest high profile attempt to address the issue is unlikely to be sufficiently robust to have any real significant impact.

• Amanda Jones is partner and head of employment and pensions, Maclay Murray Spens LLP