Businesses Urged To Address Pay Gap Sooner Than Later

In light of the Equality and Human Rights Commission's recently published proposals for businesses to analyse and make public their gender pay gap, an employment law specialist is urging businesses with larger numbers of staff to decide their strategy on disclosing pay statistics sooner rather than later.

Deborah Hely, a lawyer at Beachcroft LLP, said:

"The Commission is trying to persuade the private sector to increase transparency on pay. Employers with more than 250 staff are being actively encouraged to report on pay by gender, including outlining the difference between men and women's earnings and explaining the basis for these differences. While these measures are still voluntary, the incentive to adopt them is some degree of immunity from investigation by the Commission.

"Given the impact that equal pay litigation has had in local government and the NHS, some reticence in the private sector is understandable. However, if insufficient progress has been made by 2013, it is proposed that this reporting could become mandatory. Employers should therefore act before it becomes compulsory.

"The proposals are expected to have a particular impact on financial institutions where the gap appears to be widest. Women in this sector currently receive as much as 80% less in performance-related pay than their male colleagues."

The gender pay gap is 25.6% in the private sector compared with 18.8% in the public sector. According to recent EHRC statistics, only 9% of employers currently report pay gap information to staff outside their HR team and approximately 20% of employers actively discourage or forbid discussion of employee remuneration.

Hely added:

"The publication of statistics may well encourage a perception that there is unjustified discrimination in remuneration. Employees may then be prompted to serve equal pay questionnaires requiring answers to some very awkward questions, which could be seen as a first step towards time-consuming and costly claims. Figures presented on their own may be misinterpreted or manipulated. If publishing pay statistics, employers will need to carefully explain their basis.

"Only organisations with robust remuneration structures and the clearest evidence that pay is determined with reference to performance and merit – and not gender based influences – can afford to feel confident. It's an issue that deserves a lot of thought as this is a long-established problem which is unlikely to disappear any time soon. Smart businesses should heed the warning signs and introduce more transparency on the gender pay gap issue before this becomes a legal obligation and a litigation minefield."

Source: workplacelaw.net