April 5 was the first anniversary of the U.K. requirement to report gender pay gaps by businesses with 250 or more employees and the results were disappointing.
The gender pay gap is the difference between the average earnings of men and women, expressed as a percentage of men’s earnings. It should not be confused with unequal pay, which occurs when women are paid less than men for doing equal work.
Gender pay-gap reporting was introduced by the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. The government wanted to encourage employers to consider and, if required, to take appropriate actions to reduce or eliminate their gender pay gaps. Employers are required to publish their data on their public-facing website and to report it to Government Online by April 5 every year.
The regulations themselves do not include an enforcement mechanism or any sanctions for noncompliance. But the Equality and Human Rights Commission (EHRC) is responsible for monitoring compliance with the regulations and has the power to seek a court order against the organizations that refuse to comply with their reporting duty.
So how does the last year’s data compare with the figures recently published on the government’s website?
- No significant changes have been noted. Compared with the last year the median pay gap has narrowed by just 0.1 percent, reduced from 9.7 percent to 9.6 percent.
- The figures show that approximately eight out of 10 companies pay men more than women. The BBC has reported that overall, 78 percent of companies had a pay gap in favor of men, 14 percent favored women and the rest reported no difference.
- There was little progress in the proportion of women in top-paid jobs. In 2017, women accounted for 37 percent of the top quartile of earners. This figure increased to only 38 percent in 2018.
- Disappointingly, in certain sectors—such as finance and insurance, health and social work and the public sector—the pay gap has widened.
These figures show that the pay gap will not be eliminated overnight and more needs to be done to tackle the problem. It was also noted that a number of employers have failed to report their gender pay gaps in a timely manner and many have filed mathematically impossible results.
The Fawcett Society suggested that “employers need to set out a five-year strategy for how they will close their gender pay gaps, monitoring progress and results.” The Acas (Advisory, Conciliation and Arbitration Service) guidance on managing gender pay reporting also provides a number of suggestions of measures employers can take to tackle their gender pay gap. Regardless of their chosen strategy, short-term solutions will not solve the problem and the sooner employers implement relevant plans the faster they will see the results of their actions.
In the meantime, the EHRC has confirmed that it will take enforcement action against the businesses that missed the April 5 deadline. No company has yet faced a fine for not reporting. But it seems likely that in future sanctions may become one of the main means of policing the lack of reporting/misreporting the figures. The other option, which is becoming increasingly popular, is to name and shame the worst offenders for failure to comply with their reporting duties. It is essential therefore that businesses act now to ensure that their reports for next year are accurate and demonstrate a positive trend toward closing the gender pay gap.
Aggie Salt is an attorney with Dentons in Edinburgh, Scotland. © 2019 Dentons. All rights reserved. Reposted with permission of Lexology.