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PHILIPPA WOOD PROVIDES AN UPDATE ON GENDER PAY GAP REPORTING REQUIREMENTS

This year has seen the 100 year anniversary of women getting the right to vote.  Serena Williams recently jumped up in defence of women’s rights in the face of criticism of her recent behaviour towards an umpire. We have never been so aware of the alleged differences between the treatment of men and women.

Philippa Wood, from Prospect’s employment team, provides an update on gender pay gap reporting.

Reporting Obligation

Reflecting this mood is the ECHR, introducing for the first time last year obligations on employers with 250 employees or more to report after each full year on any “gender pay gaps” in their workforces. This year, the results are still coming in, with some companies still (for some reason!) resisting publishing their reports. However, in the main they already reveal an unfortunate and continuing trend.

Gender pay gap reporting requirements hit their one-year deadline last month (September 2018), kicking in what are now mandatory duties for larger companies to disclose the difference in earnings of men and women.

Findings to Date

The UK has been revealed to have one of the highest gender pay gaps in Europe. The median across the economy is 18% in favour of men, with pay gaps of over 40% not uncommon in some sectors.

Whatever the reasons – outdated attitudes, differences in education, domination of men in the highest paid sectors of the economy – the report highlights that businesses also need to take responsibility for “the impact of their own policies, practices and culture” and recommends that the reporting obligations go even further in the future and require organisations to explain gender pay gaps and action plans to overcome them.

“Organisations cannot rely on excuses about societal attitudes and trends to avoid examining their own contribution, conscious or otherwise, to their gender pay gaps and the effectiveness of their measures to address them. They must take responsibility for closing these gaps by taking effective action.”

In light of evidence that the gender pay gap is higher in smaller businesses the report also recommends that the Government “widens the net of organisations required to publish gender pay gap data to those with over 50 employees”.

Economic Effects & Sanctions

The reasons for the report are widely debated. However, the government maintains that it is of vital importance to the economic health of the country that these gaps are narrowed. Influential studies, including Kinsey, maintain that there is a high economic cost in failing to “secure and reward the contribution of women in the workforce”, estimating that, were the gender pay gap to close, this could add £150 billion to GDP in the next 7 years.

With regards to compliance, reporting obligations were found to have been (in general) effectively enforced by the ECHR, although there was a lack of clarity over the sanctions, which arguably are not effective enough to put people off ignoring their responsibilities.

The present sanctions are argued to be too weak and some organisations (Allen & Overy being the worst offender) delayed publication, opening the door to criticism of the powers of the EHRC.

If the report is heeded, many more organisations should in the future be under no doubt that the Government appears serious about closing this gap, or at least getting full disclosure from businesses to arm it with the means to start doing so.

In conclusion, the report is clear in its support of continued and widened reporting obligations, stating: “Increased transparency should, over time, improve fairness. And a more equal role for women in the workplace will contribute to economic growth.”

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

Philippa Wood is a solicitor with many years’ experience advising on all areas of contentious and non-contentious employment law. Her clients include individuals and companies of all sizes from entrepreneurs to global brands. Philippa qualified as a solicitor in 2005 after working for 13 years in the media, most notably being part of the start-up team for two national cable television stations in the 1980s and 90s. 

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For any questions about equal pay or concerns over or queries about possible sex discrimination claims, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

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