There have long been laws designed to stop pay discrimination in the UK. It is, in fact, unlawful under the Equality Act 2010 to pay women and men unequal amounts for equal work. That includes basic pay, bonuses, annual leave entitlement, and other benefits.
Whilst this is wonderful on paper, in practice, there is still a huge disparity in earnings between men and women, which must be closed. In April 2021, the ONS reported a gender pay gap of 7.9%, in favour of men.
A gender pay gap does not necessarily mean an employer has not complied with anti-discrimination legislation. What it shows is that women face challenges in achieving pay equality and highlights the need to do more.
Diversity and inclusion have become increasingly important to many employers as they understand the huge advantages in revenue and perception that an inclusive, diverse and happy workforce can bring. Due to changes in the law, employers are also discovering the huge cost of discriminatory actions. For example, due to systemic unequal pay, Google was recently forced to pay their female staff $118 million.
What must employers do?
Mandatory reporting obligations
Employers with 250 or more employees are legally required to provide annual reports on the gender pay gap within their organisation. The publicly available report must cover staff based in England, Wales and Scotland.
The report must contain information on six different metrics:
- percentage of men and women in each hourly pay quarter;
- mean (average) gender pay gap using hourly pay;
- median gender pay gap using hourly pay;
- percentage of men and women receiving bonus pay;
- mean (average) gender pay gap using bonus pay; and
- median gender pay gap using bonus pay.
Whilst it is not compulsory for employers with less than 250 employees to produce a report as above, many companies do so as they appreciate the benefits that this level of transparency has.
Further steps employers can take include developing and implementing measures to analyse and tackle pay gaps. These can include:
- using skill-based assessment tasks in recruitment and structuring interviews to ensure bias does not seep into the recruitment process;
- introducing transparency to promotion, pay and reward processes;
- adopting more family-friendly policies concerning part-time working, flexible working, and time off for birth or adoption to enable women to continue working and progress their careers;
- Appointing diversity managers and task forces;
- Understanding that things like menopause can have a tremendous impact on many a career women, so an open forum to discuss the support perhaps that is needed could help bypass known issues;
- Providing training on diversity and encouraging conversation. Remember, this is not a taboo; it is a problem that needs fixing;
- Fostering flexibility for male parents enables female parents to return to work and build up to full time;
- Having senior females openly discuss the employer’s strategy and support to inspire others can often create energy and ambition amongst those maybe that didn’t consider or know how to move upwards;
Further, employers may take positive actions to address the pay gap, such as recruiting and promoting female candidates over male candidates in situations where the candidates are as qualified as each other because females are at a disadvantage or are under-represented in the workforce. However, such actions must be considered carefully in accordance with the provisions the Equality Act 2010. Positive discrimination can also be unlawful and have detrimental effects. Take careful consideration so that it does not fall outside of the scope of the Act and leads to discrimination and legal consequences.
There are countless benefits to levelling out the pay gap. There are lots of ways in which this can be achieved. Care must be given when navigating the legalities of the decisions you wish to implement. It is always a good idea to seek legal advice early on to reduce the risks of any decision leading to costly litigation.
If you need help in implementing any decisions or want to know what your legal obligations are, please get in touch with the award-winning Employment Team here at ACLF.
Karen Holden is the Managing Director & Founder of A City Law Firm who practise both commercial law and litigation, having been admitted to the roll in 2005. If you require further advice or assistance, please do not hesitate to contact [email protected]
A City Law Firm Limited is a leading entrepreneurial law firm in the city of London, with a dynamic and diverse team of lawyers. It was awarded most innovative law firm, London 2016 and Business Law firm 2017. They specialise in start-up business law, the tech industry, IP and investment.