Reporting on the gender pay gap
Charles Wynn-Evans, November 24, 2017
As the Bank of England reveals its gender pay gap, what do you need to consider when writing your report and accompanying narrative?
The gender pay gap regulations require employers with 250 or more employees to publish the relevant statistics within 12 months after 5 April 2017 if they operate within the private or voluntary sectors and 30 April 2017 for public authorities. At the time of writing, 132 out of an estimated 9,000 obligated employers have published their gender pay gap figures. These include Virgin Money, Virgin Media, Fujitsu, EY, Deloitte, PwC, Aldermore, and TSB as well as a number of public bodies such as the Bank of England, ACAS and the EHRC.
The reports published so far provide valuable insights into how employers can tackle this potentially sensitive issue, not least in terms of the narrative the employer can publish to contextualise its statistics.
An employer may decide to keep its report short – setting out the statistics required by the legislation to be published and reaffirming the employer's commitment to addressing the gender pay gap. Other employers may wish to provide a longer report addressing the underlying reasons for their gender pay gap and the measures being taken to address it.
In a group situation it may be appropriate, even if a number of corporate entities within the group have their own separate reporting obligations, to report and comment upon the gender pay gap on an aggregate basis. Employers may also wish to consider whether they should report on diversity in other areas, such as the ethnicity pay gap.
Factors specific to the particular employer may need to be identified as contributing to the gender pay gap, such as the impact of a material proportion of part-time workers on the bonus pay gap, and sector-specific factors such as the disproportionate representation of men in areas such as engineering and IT and among students of STEM subjects leading into those careers. It may also be helpful to contextualise a specific employer’s gender pay gap statistics by reference to the national or sector gender pay gap.
As representation of women at more senior levels can contribute significantly to the gender pay gap, an employer’s narrative may also report on initiatives seeking to ensure that pay, bonus and performance assessment is unbiased; to assist the recruitment, retention and promotion of working mothers; and to promote the recruitment of women into traditionally male-dominated careers and precursor degrees, as well as inclusive management and leadership programmes and the linking of senior executive pay to the achievement of diversity targets.
Even if there are no equal pay concerns within an organisation a gender pay gap may exist, for example due to differential levels of representation of men and women at senior and therefore higher-paid levels. Employers concerned that their gender pay gap statistics will fuel concerns about equal pay may wish specifically to address this issue by referencing any equal pay audits that may have been conducted and how they seek to ensure pay equity in grading, salary review, performance appraisal and bonus determination processes.
Not only do employers need to carefully consider how they will present their gender pay gap statistics on this first occasion when they are legally required, they will also need to be mindful of the fact this is an annual reporting obligation. This will presumably incentivise them to ensure that they make progress but may also present subsequent presentational issues if improvements are not achieved.
Charles Wynn-Evans is a partner at Dechert