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Government Reforms (1): Gender Pay Gap returns

What do we already know?

Gender pay gap reporting was introduced in 2017. The gender pay gap is the difference between the average earnings of men and women, expressed as a percentage of men’s earnings. The Government’s intention is to encourage employers to consider and, if required, take appropriate actions to reduce or eliminate their gender pay gaps. Employers with 250 or more employees are required to publish their data on their website and to report it to Government Online every year.

The deadlines for gender pay gap reporting for employers, relating to your March/April 2018 payroll figures, year were:

For more information please see our updates here.

What’s new?

The deadlines for this year’s gender pay gap reports (based on March/April 2018’s payroll) have now passed and, overall, there has been a slight reduction in the national average pay gap from 9.7% to 9.6% (in favour of men).  However, according to the Government’s statistics, less than 50% of firms have narrowed their gap since gender pay gap reporting became mandatory. 45% of those who published their data have seen an increase in their gap and 7% have seen no change.

Of the 10,428 firms who have reported their 2018 stats, 78% had a gender pay gap in favour of men. 14% had a gap in favour of women and 8% had no gap at all. There was little progress in the proportion of women in top paid jobs. In the 2017 figures (out a year ago) women accounted for 37% of the top quartile of earners. This figure increased to only 38% for the 2018 figures. Disappointingly, in certain sectors such as finance and insurance, health and social work and the public sector the pay gap has widened.

It is unclear how many employers have failed to publish their data. However, the Equalities and Human Rights Commission has confirmed that it will take enforcement action against the businesses that missed the 2019 deadlines. No employer has yet faced a fine for not reporting, but this does seem a likely sanction in the future, and repeated failure could result in an unlimited fine.  The other option, which is becoming increasingly popular, is to name and shame the worst offenders for failure to comply with their reporting duties.

Comment: It is perhaps unsurprising given that there has been little progress on narrowing the gender pay gap.  This is because, even if employers have taken measures to narrow the gap, these are likely to take time to show results, given the time-lag between when the figures are taken and when they are published.  The 2018 figures just published are already a year old now, and hopefully by now they gaps will have improved for many employers.  These latest figures do, however, show that the pay gap will not be eliminated overnight and more needs to be done to tackle the problem.

There is plenty of guidance available for employers looking for ways to try and improve their figures for next year. In our update Government reforms (3): GEO – Gender Pay Gap guidance we look at two new pieces of guidance (available here and here) to help employers identify the potential causes of any gender pay gap within their organisation and develop an effective approach to tackle it.  The Government Equalities Office has also recently published an action note for employers on how to promote the progression of women at work (available here) and ACAS has also updated its guidance on Gender Pay Gap reporting available here.

Organisations such as the Fawcett Society (the UK’s leading charity campaigning for gender equality and women’s rights) and the Equalities and Human Rights Commission have urged employers to create action plans and strategies to close their gender pay gaps and to monitor their progress.  However, to date, the Government has resisted taking formal action on this and has said (in its response to the House of Commons BEIS Committee’s report) that it is not planning any immediate changes to the regime, but will wait until the statutory review which is scheduled for 5 years post-implementation (see response here).

In the meantime, employers may be starting to turn their attention to the Government proposal to require employers to report on the ethnicity pay gap (see our October Newsletter Government reforms (1): Mind the ethnicity pay gap).  A Government consultation on introducing such a duty closed at the end of January 2019 and its response is awaited. In the meantime, a number of large employers have signed up to a pledge to report voluntarily, organised by Involve, which has published a Framework for Ethnicity Pay Gap Reporting to assist employers – available here.

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Review Solicitiors