THE BLOG

Will Gender Pay Reporting Work?

31/01/2017 16:24 GMT | Updated 31/01/2017 16:24 GMT

We are getting on for 50 years since the introduction of the Equal Pay Act and yet the UK gender pay gap remains stubbornly wide.

Analysts have calculated that it will take 50-60 years to close the gap at the current rate.

The government has introduced new gender pay reporting regulations to help bring women's pay closer to men's.

On 5 April, businesses with more than 250 employees will have to take a snapshot of their employees' pay so they can publish a gender pay report the following year.

This report will include the business's gender pay gap, which is the difference between men's and women's average hourly earnings across the organisation.

It is hoped that this kind of reporting each year will help to reduce the gender pay gap. However, a report will only indicate that there is a gap and not tell you the why.

First, a recap. The right to equal pay, embodied in the Equality Act (2010), requires employers to pay men and women equally for like work, work rated as equivalent and work of equal value. So if you are a female sales executive (same role, same job title) you can expect to be paid the same as your male counterpart.

But you are also entitled to equal pay if you are doing a job with similar value in terms of skill, effort and decision making. For example, nurses and catering staff comparing themselves to plumbers and joiners in a hospital.

A lack of equal pay can form part of the gender pay gap but it is not its sole cause.

The gap exists because of several reasons, including occupational segregation, the use of market rates to set salaries in areas disproportionately populated by men, an over-reliance on management discretion in awarding pay increases, and a lack of confidence amongst female staff in putting themselves forward for promotion.

Closing the gap

The success of this new regulation will depend on the willingness of employers to explore the reasons behind the gap and address these in good faith rather than seeking to reduce it by dubious means, such as outsourcing lower paid roles.

Positive steps employers can take include providing women with coaching and mentoring to help them to develop into senior roles, offering flexible working, using positive action, openly encouraging women to apply for posts and making sure pay and progression systems are transparent and regularly reviewed.

But there is perhaps one big stumbling block. If employers are serious about addressing the gap they will need to set aside money to address significant differences.

In the long term evidence suggests that there are significant business benefits to a smaller gap, but in the short term it may take investment in pay to solve the pay problem.

And there's the rub.

New Acas guidance on gender pay reporting can be seen here.