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Employers must take gender pay gap seriously or risk costly litigation

David Scott

It has been over 43 years since the first equal pay legislation came into force, yet there continues to be a failure to pay men and woman equally for the work that they do. Contributor David Scott, Senior Associate Solicitor – Hethertons Solicitors.

Employers are being urged to invest in gender pay gap studies to ensure that they do not expose themselves to an expensive tribunal case. The requirement for larger companies (with 250 employees or more) to publish their gender pay gap has confirmed not only that the disparity exists but that the gap appears to be widening.  Initial analysis of the 2019 gender pay gap reports indicates that three-quarters of companies pay men more than women.

The Financial services sector has one of the worst gender pay gaps in the UK.  The 2019 figures demonstrate a reduced pay disparity of around 0.5 per cent over the past year for the sector as a whole, this headline reduction hides the fact that over one-third of financial services companies have seen an increase in the gender pay gap according to data from the 89 largest businesses.

According to its 2019 gender pay gap data, the average gender pay gap at RBS was 36.8 percent.  That is one of the biggest gaps reported by a firm with 5,000 employees or more.   It may not be surprising to learn that a former Royal Bank of Scotland (RBS) employee has recently reached a settlement amounting to £150,000 with her employer after bringing an equal pay case against the bank.

The bank did not agree that any discrepancy in pay was based on the gender of the employee and said that it took a fair and inclusive approach to setting pay, but it didn’t think it “got things right in certain areas” and so settled to resolve the matter. 

David Scott, Senior Associate solicitor at Hethertons solicitors, said: “An equal pay claim is one of the costliest types of litigation in the Employment Tribunal, not just in legal costs but also in the management time and disruption to the business it entails.”

He recommends that businesses should consider “seeking professional assistance to produce a gender pay gap report, even where they don’t have a legal requirement to do so.”

“It will give you have a better insight into your pay structure, how it compares with those companies that have published their reports and allow you to identify any disparities,” David added.  

“Having the knowledge of a potential pay gap will not only allow you to consider the reasons for it and develop strategies to eliminate any potential issues associated with unequal pay, but it will also help companies to avoid costly litigation in the Employment Tribunal, motivate employees, improve recruitment and make sure that businesses are doing the right thing.”

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