Employers with 250+ people have been required to publish their pay data with reference to gender (in other words, disclose their Gender Pay Gap) since April 2017.
Pay equality and transparency is of course something to mostly be welcomed, but its introduction brought with it a host of legal and financial headaches for employers. Our Gender Pay Gap Audit & Advice service is designed to provide you with the professional analysis, support and advice to deal with the risks and impact of GPG reporting.
The legal requirement to ensure equal pay came into force in 1975 under the Equal Pay Act 1970, partly the result of an equal pay movement inspired by the 1968 Ford Dagenham sewing machinists’ strike. In the (almost) fifty years since, the GPG has steadily reduced, but remains at 15.4 average in favour of men in 2022.
Equal pay law covers not only pay differentials within the same job role, but can in many circumstances require that pay rates are standardised across different functions for ‘work of equal value’. This has led to massive group claims in the public and private sectors, where traditionally ‘female’ roles – such as cleaning, caring and retail jobs – attracted lower rates than ‘male’ work found to be of equal value, such as maintenance, refuse collection and warehouse-based roles.
If you cast your mind back to July 2015, David Cameron, announced that, in order to force further change and tackle the remaining Gender Pay Gap, mandatory pay data reporting would be required for larger employers. A voluntary GPG disclosure scheme, established in 2011, had been a failure.
Since then, government has continued in the same direction and shows every sign of increasing the amount of mandatory disclosure of pay information. We’d argue though that the Covid pandemic has perhaps slowed that down.
So what do employers need to do?
Audit – You should arrange for a professional equal pay audit of your workforce to be carried out. Elements to assess include basic pay, any variable like bonus or financial incentives, any enhancements such as shift pay, weekend pay or overtime, any allowances such as clothing, tools and travel time and any financial benefits such as PMI and insurance cover.
Data analysis – The results of the audit data need to be presented and studied carefully, by function, business unit and location. The unintentional inequity of some of some of your enhancements and fringe benefits, for example, might undermine the fact that your actual basic pay is itself fairly gender-neutral. Anything discretionary might be inequitable – you need to consider and test it. Historical changes can mean inequities become hidden in your policies.
Legal – You need to take advice on whether you have any legal defences to any GPG you may find, such as the ‘genuine material factor’ defence, which often works effectively. You may well need advice on whether different roles are ‘work of equal value’, which is where the majority of equal pay risk lies. High risk areas need particularly careful attention. You then need to prepare a legal strategy for dealing with any equal pay claims that are likely to arise, not only from current employees but from those who left you up to 6 years ago.
Relationships and communication – You need to prepare to answer difficult questions from your employees, customers, shareholders and other stakeholders. You may well need to rebuild trust with any staff who discover that they have been negatively affected by any GPG. You may need to review your employee engagement, morale and productivity levels.
Financial – You need to plan how you are going to fund any equal pay claim pay-outs – particularly the potentially large back-pay claims that can grow up over the years.
Can we help? Our Gender Pay Gap Audit and Advice Service provides all the audit, analysis and legal advice you need to satisfy this process