A report by the Business, Energy and Industrial Strategy Committee has called on the government to widen the net of organisations required to publish gender pay gap data to include those with over 50 employees because of evidence of a higher pay gap in smaller businesses.
Following the introduction of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, public and private sector organisations with more than 250 employees have to publish their gender pay gap statistics every year, starting in April 2018. This includes the mean and median hourly rates of pay for men and women as well as bonus payments (see weekly LELR 520).
Whilst all 10,000 companies within the scope of the regulations have now published the required data, the committee expressed its concern about the scale of the problem that the data has uncovered.
In particular, it highlighted gaps of over 40 per cent in some sectors, 78 per cent of which were in favour of men. In addition, it found that 13 per cent of the total (almost 1400 organisations in all), including many household names, published gender pay gaps of over 30 per cent.
The committee has therefore recommended that organisations should be required to publish, alongside the bald figures, an explanation of any gender pay gap and, most importantly, an action plan for closing the gap, against which they have to report progress each year, as part of normal reporting requirements.
In addition, the committee called on the government to alter the reporting requirements and improve the quality of the guidance on how to calculate the figures. This would avoid the situation in which some leading providers of professional services could exclude their highest earners (i.e. partners) from the statistics, thereby producing figures that underestimated the size of their gender pay gaps.
In order to focus minds and to ensure that reducing the pay gap becomes more of an organisational priority, the committee has suggested that in companies that have significant pay gaps, relevant board members, including CEOs, should have appropriate objectives and Key Performance Indicators such as bonuses that are dependent on reducing the gender pay gap over time.
Matthew Pull of Thompsons Solicitors commented: “It is shocking in 2018 that you can be paid over 40% less because of your gender. These figures show there is still a significant way to go to eradicate such inequalities, and highlight the inadequacy of the Government’s current reporting requirements. Particular failings are the exclusion of certain individuals (i.e. partners) and employers with less than 250 employees from reporting, which it is anticipated masks a much higher overall gender pay gap, as well as the failure to require employers to provide any sort of explanation or strategy for how they intend to reduce gender pay gaps within their organisation.”
Visit the parliament website to read the report in full and visit the government website to read about pay gap reporting.