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Businesses likely to have large Gender Pay Gaps to report and explain

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  • Businesses reporting their gender pay gap next year will be likely have a 10-20% gap to report and explain, with some looking at as much as 20-40%, an employment law firm has warned.  
  • Although the national average gender pay gap is 19%, in some areas such as the South West it is 21% and in Wales 22%. 

Menzies Law, has spent the last year researching and raising awareness of the Gender Pay Gap and the government legislation that aims to reduce it. Luke Menzies, director, barrister and solicitor at the firm and an expert on employment law, said: “As of next year, organisations with over 250 employees will have to report on and publish their Gender Pay Gap. This is likely to be followed by a barrage of questions and equal pay claims by employees, and we are urging employers to get ready for this as early as possible to be prepared. Some firms have already started to audit and look at their figures, but many have done nothing, or are not fully aware of the legislation and how to comply with it. This isn’t something that is going to go away though, and all the figures we have looked at suggest that most organisations will have at least a 10% gap to report, with some much higher.” 

In response to the new legislation, Menzies Law has launched a new service that is unique within the legal industry – a Gender Pay Gap Audit & Advice report, that combines the expert legal advice you’d expect from a law firm with an equal pay audit conducted by a pay consultant, which is something normally provided by an accountancy firm or specialist HR consultancy. This unique approach means that Menzies Law can not only offer the legal advice, but also crunch the numbers for all workforce pay and benefits, producing a detailed equal pay report that calculates the employer’s Gender Pay Gap, highlights any specific equal pay risks and advises on what steps to take. Because it comes from a law firm, the entire report benefits from ‘legal privilege’ meaning that it is fully confidential and cannot be disclosed during any court or employment tribunal case. 

They have also released a white paper on the subject for employers, to help them understand the legislation and legal issues in full. “Equal pay law is fiendishly complicated”, said Mr Menzies. “What you might think is a perfectly good reason for a pay difference, may not pass muster in court. Having spoken to many businesses, they seem to be under the impression that they do not have a Gender Pay Gap, or that it’s going to be tiny. But in reality, that is unlikely. Our experience is that even in businesses with complex pay structures and job evaluation schemes, and the very best of intentions not to discriminate on pay, they are still very likely to have a Gender Pay Gap – one that ‘s large enough for them to need to take action to reduce it.” 

There are a number of important reasons for a business needing to know its Gender Pay Gap. As well as having to publish its Gender Pay Gap on its website, each business will have to upload its data to a national government website, where the public will have fully searchable access to every employer’s figures. “The likelihood is that we will soon see ‘league tables’, where the government, trade unions or campaign groups will ‘name and shame’ employers with the worst Gender Pay Gaps”, said Mr Menzies. “These league tables might be by industry sector or town, for example. No business is going to want to stand out in this way. It might well lose them business, particularly any public sector contracts.” There is also an upside, says Mr Menzies. “Businesses will be able to market themselves strongly on having a negligible Gender Pay Gap. It will work superbly in both recruitment and winning customers and clients in general, especially in crowded markets. It would be a great thing to boast about.” 

Stats and facts:
  • All businesses and public sector bodies with 250 or more staff will need to report their gender pay gap as it stands by 5 April 2017
  • Non-compliance with this will result in a fine of up to £5,000.
  • The national average Gender Pay Gap is 19.2% 
  • What have we learned about the Gender Pay Gap?

The majority of organisations who will be required to report their gender pay gap from next year will have at least a 10% gender pay gap to report and explain. Some will be looking at a 20-40% gap. Having a well-designed pay structure or job evaluation scheme does not necessarily mean you will have no gender pay gap or only a minimal one. 

Decisions on pay are too often inconsistent or are not sense-checked or calibrated around a business. 

A lot of Gender Pay Gaps are not directly caused by sex discrimination by bosses. Gender Pay Gaps are caused by a range of things, including the choices that women make around work and family commitments and the value that employers and society place on lower paid work – which is often seen as ‘women’s work’. Where any sex discrimination is at play in pay decisions, it is most often unintentional (unconscious bias) and then gets exacerbated and then made worse by being perpetuated over time. 

Individual salary negotiation is thought to generally favour men over women, as they tend to negotiate differently. Most organisations still fail to recognise and recalibrate for this.

The latest research on requests for pay rises shows that women do, in fact, appear to ask for pay rises as often as men, but they are more often refused. Despite having company guidance or policies in place on pay, many are still not applied or followed correctly. Gender pay gap reporting will not only highlight disparities in pay between genders, it will also highlight disparities between genders as regards career progression.

It isn’t just pay where we are seeing a gender pay gaps – it is widely prevalent in allowances, company cars, bonuses and reward schemes too.

www.menzieslaw.co.uk.

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