Comment: Need to tackle underlying gender pay gap causes

Susannah Donaldson, senior associate and employment law specialist at Pinsent Masons. Picture: Peter Devlin
Susannah Donaldson, senior associate and employment law specialist at Pinsent Masons. Picture: Peter Devlin
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It could be viewed as the UK’s ­biggest poker game, with more than 90 per cent of businesses required to publish gender pay gap (GPG) details waiting to see who blinks first. As the 4 April deadline looms large – for firms with 250 or more employees legally obliged to disclose pay gap stats – only 536 out of an estimated 8,000 have gone ­public.

It’s a fair assumption that many are waiting for others in their sector to publish first, with the resultant negative publicity shifting the spotlight from their own ­figures, or at least softening the impact.

With many businesses, the pay gap stats won’t tell the full picture and in the majority of cases the underlying reason for the disparity will not be an equal pay issue, but under-representation of women in the higher-paid senior management levels. For this reason, it is strongly recommended, though not obligatory, that companies publish an accompanying narrative to ­provide some context to the pay gap data.

We have undertaken a number of legally privileged equal pay audits for clients to enable them to provide assurances that the pay gap is not indicative of a wider equal pay issue, which would be unlawful, or to help them home in on where problem areas lie and take corrective action.

Forward-looking companies will set out an action plan on how they will address the gender pay gap now and in the years ahead, for GPG reporting will now be an annual requirement and judgement will be passed on how much or little progress is being made in cutting the deficit.

Action plans may include targets for increasing the number of women in ­senior management roles or, as with easyJet, which has one of the widest pay gaps at 51.7 per cent, determining that 20 per cent of new entry pilots should be female by 2020.

Pinsent Masons’ own Project Sky initiative was introduced in 2014 to achieve 25 per cent female representation in our partnership and I’m happy to say this target was achieved a year ahead of schedule.

Recruitment initiatives that encourage more women into science, technology, engineering and mathematics (STEM) subjects at school or university will help improve the pipeline of female talent in male-dominated sectors such as construction, energy and financial services.

The reality is that women still bear the brunt of childcare responsibilities and putting agile working arrangements in place is another measure that enables them to remain at work and reach more senior and well-paid positions, while implementing a “returnship” initiative will encourage skilled, experienced women back into the world of work after taking career breaks to look after children.

However, businesses that commit to an action plan must be transparent and go through with those commitments. Our own diversity and inclusion consultancy, Brook Graham, has provided advice to a range of businesses on what others in their sector are doing and which initiatives and interventions will have the greatest impact.

Internal communication is another area to consider. Strong and positive communication with staff can pre-empt concerns.

Companies that don’t comply with GPG requirements by the deadline should expect pressure from the Equality and Human Rights Commission. Options are likely to include naming and shaming on social media of those that have failed to report and requiring them to commit to an action plan.

Failure to comply with such a plan can lead to court action and ultimately to receiving a significant fine. However, the potential reputational damage to a business, not to mention the negative impact on current employees and recruiting prospective employees, should ensure there is a high compliance rate come 4 April, and the coming weeks will be interesting as 7,000-plus businesses place their cards in a row and get ready to play the next hand.

- Susannah Donaldson, senior associate and employment law specialist at Pinsent Masons.