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The news in the past week has been dominated by stories about the gender pay gap and the differences in what men and women have been earning for the same roles in a number of organisations. The CEO of Easyjet reportedly agreed to take a pay cut of £34,000 to bring him in line with his female predecessor. The former BBC China editor Carrie Gracie stepped down from her role in early January after discovering that her male counterparts were earning significantly more than her. When she queried this, she was reportedly told that the difference was “because she was in development”. In its report into on-air salaries in the BBC, PWC also discovered a 6.8% gender pay gap amongst staff.

These stories have been widely reported, and there is often a conflation of two concepts: the gender pay gap, and equal pay. Equal Pay refers to the fact that men and woman should generally receive equal pay for performing equal work. This is in accordance with the Equality Act 2010 and with directly applicable EU legislation. The Gender Pay Gap is the disparity between the average earnings of men and woman across an organisation, sector, or the labour market as a whole which does not necessarily indicate equal pay issues.

Equal Pay

Under the Equality Act 2010 and the Treaty on the Functioning of the European Union, men and women should receive equal pay for equal work. This includes jobs which are the same or broadly similar, and also work which is rated as being equivalent. A recent example is the EAT ruling last year that store workers in Asda, who were mainly female, were entitled to compare themselves to depot workers, who were mainly male, and claim that they should be paid at the same rate. The cost of such claims can be huge, with the costs in issue in this case reportedly exceeding £100 million.

In practice, there can be some difficulty in establishing whether roles are equivalent. Under domestic legislation, a job evaluation study is often necessary to analyse whether roles are equivalent. This is done by grouping roles into “bands” which should receive the same salary. Furthermore, employers can pay a man more than a woman for doing the same or equal work if it can show that there is a material factor, which is not directly or indirectly discriminatory, that has resulted in the variation. For example, in relation to some of the highly paid male presenters, the BBC will likely argue that their particular experience sets them sufficiently apart from women doing equivalent roles to justify higher salary (although whether such this explanation is sufficient is a different question).

The PWC BBC audit also noted that a particular problem was an absence of pay ranges, leading to a lack of clarity and openness about pay and “a sense of unfairness because individuals are not aware of where they are paid in a range”. Although so called “secrecy clauses” are banned by the Equality Act to the extent that they attempt to cover discussions between colleagues with a view to identifying pay discrimination, it can be difficult to identify equal pay issues. Interestingly, the Fawcett Report recently recommended that the Freedom of Information Act should be extended to include pay in the private sector, to allow accurate anonymised information to be obtained for the purpose of equal pay claims. They also recommended mandatory equal pay audits every three years for employers with more than 250 employees.

Gender Pay Gap

The gender pay gap is the wider issue of the difference in average pay between men and women in specific sectors, organisations, or society as a whole. The reasons for the gap can vary between industries. Easyjet identified a large gender pay gap of 51.7%, due to the fact that the vast majority of its pilots, 94%, are male, and earn substantially more than cabin crew, who are mostly female. This is not an Easyjet specific problem; only 4% of commercial pilots worldwide are female.

The gender pay gap in a particular organisation is an interesting measure, but it is not always wholly the result of what an employer is or isn’t doing. Unlike equal pay, which is directly controlled by an employer, the gender pay gap is influenced by trends in society as a whole. One major factor is that women as still far more likely than men to reduce their hours or take time out of employment to become unpaid carers, whether for children or otherwise. In the light of this, the Fawcett report has recommended that paid carers leave is introduced, and that a comprehensive review of parental leave is undertaken, with paternity leave extended, and pay for maternity, paternity, and shared parental pay increased to the living wage for at least 36 hours per week. With Government estimates putting the number of men taking up shared parental leave at only between 2% and 8%, it is clear that there is room for improvement. 

As most employers will be aware, there is now an obligation on large private sector employers to carry out calculations showing how large the pay gap between male and female employees in their organisation is, and to publish the information within 12 months on their website. The reports have to show mean and median average hourly pay, information on any gender gap in bonuses paid, and the proportion of men and women in four pay bands, which show the spread of the pay gap at different levels of seniority in the organisation. Employers with more than 250 employees have until 4 April 2018 to publish their first report.

Businesses have the opportunity to publish an explanatory narrative along with their statistics, and the trend to date indicates that many will take this opportunity. Phase Eight have reported a gender pay gap of 65%, but have been quick to clarify that this is because the majority of retail staff are female, whereas corporate head office staff are “more evenly split between men and women”.

The Fawcett Report has recommended various amendments to the Gender Pay Gap Reporting Regulations, for instance extending them to cover organisations with 50 over employees, and extending the reporting requirements to include details of age, disability, ethnicity, and other data to give an indication of whether there are combined factors that are leading to women with certain characteristics being particularly disadvantaged in terms of pay.

Conclusions

It has been interesting to see the responses of organisations that have been in the news over the last month in relation to gender pay reporting. Easyjet has committed to having 20% of all new pilots recruited be female by 2020. Phase Eight have listed four commitments to improved diversity and inclusion in their workforce, including more actively promoting flexible working and shared parental leave, and encouraging store employees, who are overwhelmingly female, to apply for internal corporate roles. Although the gender pay gap reporting regulations have faced criticism because the lack of formal consequences for failures to comply, it seems that those who have published their data to date have felt compelled to make commitments to improve from a reputational point of view. It remains to be seen whether the majority of large employers will follow suit as the April deadline for publication approaches.

In terms of equal pay, the pay scandal at the BBC has resulted in a number of male on-air staff agreeing to take pay cuts. As a general trend, however, it is much more difficult to know how widespread a practice there is of unequal pay for equal work in the UK without any form of compulsory reporting or auditing requirements. What is also clear, however, is that if such practices are revealed this can be extremely costly for employers.

It therefore pays, both financially and reputationally, to ensure that both equal pay and the gender pay gap is kept under review within your organisation, and that steps are taken to tackle any issues which are highlighted.

If you would like to discuss any of the points raised in this blog, please contact a member of our employment team.

Annika Neukirch, Solicitor

Chambers UK 2018

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