Gender Pay Gap reporting: Are you ready for the big reveal?

28 July 2017

With the introduction of mandatory reporting rules for all larger employers in April this year, gender pay gap issues have never been far from the headlines in recent months. Now, following a turbulent week for the BBC, the issue has once again been thrust into the spotlight, serving as a timely reminder for employers of their impending reporting obligations. 

Some employers, mindful of their own gender pay gaps, may be observing apprehensively as the BBC rides out the storm stirred up by its publication of presenter salaries. Here, we look at what will be required of other employers in the coming months and whether they too could be facing similar challenges.

BBC backlash

'Happy BBC salary day' went Gary Lineker's early morning tweet, '...Now where did I put my tin helmet?'. A neat way to sum up what was undoubtedly a more widespread feeling of discomfort and trepidation at Broadcasting House last week as the Corporation prepared to publish the names of all staff earning in excess of £150,000. And, as it turns out, his instincts were right. A tin hat would have served him (and other high profile presenters and senior executives) very well in the storm of protest that has followed.

Many of the objections have centred around the issue of excess - whether the highly paid top talent, paid for by the licence fee payers, really represent value for money. But it is the issue of gender and the apparent disparities between what the Corporation pays its top male talent compared with its top female talent that has provoked the most furious debate.

Everyone, it seems, has a view on the role gender has played in the Corporation's remuneration of its employees. At one extreme you've got the ostriches - those who deny even the existence of a gender pay gap, let alone that steps need to be taken to address it. Then there are the free marketeers - who acknowledge a degree of disparity but insist that the best talent will always demand the highest salaries, with gender playing no part in determining pay.

At the other end of the spectrum there are those that say this is discrimination, pure and simple. This includes the 40 or so well-known and respected female broadcasters - who, in rapid response to the salary disclosures published an open letter to the corporation's Director- General, Lord Hall. This asserted that women at the BBC are being paid less than men 'for the same work' and demanded urgent action on closing the gender pay gap.

The BBC is now left to pick up the pieces and determine a way forward. But it won't be easy. A general levelling up of pay seems unlikely, bearing in mind budget restraints and some reports that, in certain areas, the corporation's pay is already in excess of commercial rivals. Equally, pay cuts (at least among the rank and file) are likely to encounter union and employee resistance, not to mention the legal hurdles.

The shape of things to come?

A number of commentators have suggested that the BBC disclosures are just the forerunner in a new world of transparency, pointing to the mandatory reporting obligations that are coming down the track. But are other employers likely to find themselves facing the same challenges as the BBC?

Well, not quite. The BBC finds itself in a unique position in having to name individual earners and their salary bands. This is a specific requirement of the corporation's new Royal Charter and a symptom of the fact that, as an organisation funded by the licence fee, the Charter requires them to exercise rigorous stewardship of public money.

For employers covered by the mandatory reporting regulations (those with 250 or more employees) the information required is far less intrusive.

The key obligations are to report on:

  • the gap between average pay of male and female employees;
  • the number of men and women in each quartile pay band (where each band represents an equal number of employees when ranked in order of pay);
  • the gap in average bonus payments made to male and female employees; and
  • the proportion of male and female employees who received bonus pay.

So, there's no equivalent obligation to name individuals and no requirement to provide breakdowns of the relevant gaps by role or grade. The lack of granularity is one reason why the rules have been criticised as not going far enough. It means that while employees will have transparency about the overall gender pay gap it won't be clear what the contributory causes are, unless details are given by the employer in a voluntary narrative. Also, it won't show whether there is a gender pay gap between employees who might be said to do equivalent work.

What's clear, though, is that the BBC won't have the worst gender pay gap of all those required to report - not even close. As the Director-General has been at pains to point out, the BBC's overall gender pay gap is in the region of 10% - that's 8% lower than the national average and 20-30% lower than typical employers in those sectors with the highest gaps, such as financial services.

The early reporters

The new obligations need to be complied with by either 30 March 2018 or 4 April 2018 (depending on whether the employer is covered by the public or private sector rules). However, the data used to collate the report will be determined by the 'snapshot' date, which was 31 March 2017 or 5 April 2017, (again depending on which rules apply).

The government portal, where all reports are to be published (in addition to being posted on employers' own websites), is now live and those who want to get ahead of the game can publish early.

By the end of July 2017, fewer than 40 organisations had posted their statistics, with most employers expected to take advantage of the full reporting period.

While it's difficult to generalise, those that are reporting early are tending to be organisations that have a fairly positive story to tell, such as a relatively small gender pay gap and/or a healthy level of female representation at the senior end of the organisation. That said, there are organisations whose reports have been added to the portal who have reported fairly significant gender pay gaps. Although we can only speculate at how the reports may have been received in the particular organisations in question, what we do know is that none has received anything like the attention of the BBC's recent disclosures. That's partly to do with who the BBC are and what they stand for. But it's mainly to do with the additional level of transparency - creating the ability to attribute salaries to named individuals and attempt to draw comparisons about the relative worth of individuals. Without any breakdown of gender pay gaps, it's almost impossible for those types of comparisons to be made.

Does a gender pay gap spell equal pay issues?

The short answer is 'no'. A lot of confusion exists about the correlation between gender pay parity and equal pay. Although often treated as one and the same thing, in reality they are quite different. A gender pay gap is a basic measure of the average differences in pay between male and female employees. Equal pay, on the other hand, is a specific legal concept that requires that men and women are paid the same for equivalent work. That might mean:

  • exactly the same job;
  • different work that is of 'equal value' in terms of the demands made on the individuals (by reference to factors such as effort, skill and decision-making); or
  • work that has been rated the same as another in a job evaluation study.

Unlawfully discriminating, by failing to comply with existing equal pay laws, may be one factor impacting on an organisation's gender pay gap. In practice, though, a wide range of other factors is likely to influence the figures, such as the underrepresentation of female employees in senior management roles and the fact that many of the traditionally lower paid occupations are still predominantly carried out by women.

It's possible that some employers with a relatively high gender pay gap could be fully compliant with equal pay legislation because of the particular demographics of its organisation. Conversely, some employers with relatively low gaps may not be compliant because they are discriminating between men and women in comparable roles.

Closing the gap

Given the broad range of factors that contribute to the gender pay gap and the fact that not all of these can be clearly controlled by individual employers, closing the gap is not something that will be achieved with the wave of a magic wand.

In many cases, it will be difficult to eliminate a pay gap entirely because it is naturally going to fluctuate (positively and negatively) over time. This is particularly the case in smaller organisations, where one or two changes at the senior end of the organisation could influence the gender pay gap quite significantly. But, employers should be wary of a stubborn pay gap that is not changing over time and which, crucially, they can't readily explain.

Some have criticised the new reporting rules as hugely bureaucratic for employers without doing anything to tackle underlying equal pay issues. But the desire of employers, particularly the more progressive ones, to be able to clearly explain the causes of their gap, is forcing employers to take a long, hard look at how they remunerate staff and any deficiencies in their current procedures, which many will welcome.

Many employers also understand that even if they are compliant with equal pay laws, there is still much they can do to reduce the gaps in their organisations. For example, lots of organisations are actively now working on initiatives to encourage more women into senior management positions. The jury's out on how best to go about that. Employers are looking at a whole range of options, from education and mentoring, to targets, to measures designed to ensure a greater sharing of childcare responsibilities between the sexes.

Employers, including the BBC, have started to make ambitious predictions about how quickly they plan to close their own gender pay gap. But while eliminating equal pay issues is a realistic and laudable short term aim (particularly given the legislation has been in force for over four decades!) it remains to be seen whether organisations can deliver on their promises of closing the gender pay gap within the same timeframes.

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