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The gender pay gap—what actions can the government and businesses take?

  • United Kingdom
  • Employment law

14-02-2018

This article was first published on Lexis®PSL Employment on 7 February 2018.

Employment analysis: In the second of a series of three interviews looking at the gender pay gap, Shirley Hall, senior partner and head of the employment team at Eversheds Sutherland in Newcastle, discusses what the government and businesses can do to tackle the gender pay gap and how companies are dealing with the new reporting requirements.

The Conservative government recently ordered large firms to reveal their gender pay gaps. Do you think this is an effective method to tackle the issue?

The requirement on large firms to reveal their gender pay gaps will encourage more transparency in relation to pay, and will result in firms actively considering what steps they can and will take to endeavour to close any pay gaps within their workforce.

However, this requirement will not tackle the national gender pay gap quickly. It will take a long period of time to close the gap because there are many societal and cultural reasons, in addition to employment practices, as to why there is a gender pay gap.

The majority of companies are yet to publish their figures. Why do you think so many companies have been slow to publish figures? What are the repercussions if companies fail to produce the figures before April 2018?

The 2017 Gender Pay Gap Reporting survey by Mercer reported that companies are struggling with the complexity of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, SI 2017/172, and are keen to ensure that these are calculated accurately and that any accompanying statement puts those statistics into context to manage any potential reputational or litigation risks that could arise. Also I think a lot of companies, as they are entitled to do, are preparing their statistics but waiting until nearer the deadline to publish their figures.

The Regulations themselves contain no specific financial or other penalties. However, if companies fail to publish their figures before the April 2018 deadline, there is a risk that they may face enforcement action from the Equality and Human Rights Commission (EHRC) which is empowered by the government to enforce compliance with the Regulations. The EHRC has published a draft enforcement policy, which is currently being consulted upon. A failure to comply with the Regulations may be regarded as an unlawful act for the purposes of the Equality Act 2010, which the EHRC can seek to enforce. Ultimately, enforcement could result in a financial penalty. The EHRC, in its draft policy, has said that it wants to work with employers to help them comply with the Regulations even after the deadline date.

An FT investigation in December 2017 found that one in 20 employers submitted figures to the government website that were deemed ‘almost certainly inaccurate’. Could the government face issues with accuracy? How can they tackle this issue?

There could be an issue with accuracy as the Regulations are very technical and complicated. There are a lot of grey areas that require employers to make a judgment call, which could result in the EHRC reaching the view that an employer has approached the statistics incorrectly.

The EHRC has stated in its draft enforcement policy that it will initially focus its enforcement activities on those companies who do not publish their statistics, but thereafter it may look into the accuracy of statistics published.

What potential issues could a business face if it publishes figures that show a wide gender pay gap (ie reputational damage, legislative action, compliance issues)?

A wide gender pay gap can result in reputational damage if it isn’t properly explained. Reputational damage could impact on the ability of the company to contract with potential customers and suppliers, particularly if they contract with the public sector, which often includes equal opportunities and diversity questions within its tender documents.

A wide gender pay gap can impact on the ability of the company to recruit and retain staff (even if there is no reputational damage). For example, if there is competition for talent and an employee has an offer of employment from two employers, it may be that they decide to choose the employer who has published a lower gender pay gap because they may perceive that the employer with the lower gender pay gap is a more diverse organisation.

A high gender pay gap may also create an impression that there is an equal pay problem within the employer. Gender pay and equal pay are two very different things, and a gender pay gap can exist even where staff performing equivalent roles are paid equally because of representation in senior roles. However, there is a lot of misunderstanding in this respect, which can result in equal pay litigation arising where there is a high gender pay gap.

Data shows that the gender pay gap is widening in one in four government bodies. How can the government tackle issues in the public sector? Are they able to implement more stringent methods compared with the private sector?

The enforcement mechanisms in relation to the Regulations referred to above apply equally to government bodies. Government bodies also have a public sector equality duty and so there is potential for action to be taken for a failure to comply with that duty.

Can the UK government take any lessons from other governments in terms of tackling the gender pay gap? What policies from abroad have succeeded or failed?

There is a wide range of policies, particularly in Europe, in relation to reporting the gender pay gap which vary in terms of numbers of employees that trigger the duty, to the range of reporting information that has to be provided, and in some cases the mandatory involvement of trade unions in the process. However, my understanding is that none of these have dramatically improved the gender pay gap within these countries.

Shirley Hall is head of the Newcastle employment team and is the Eversheds Sutherland HRG lead on equal pay including gender pay gap reporting. She has considerable experience of advising public and private sector organisations on equal pay issues and supporting employers as they prepare for gender pay gap reporting. Shirley has conducted and supervised the defence of equal pay claims against a number of large unitary local authorities and has overall supervision of the NHS equal pay litigation conducted out of the Newcastle office.

Interviewed by Kate Beaumont.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor

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