Blog: Tips for companies to address a gender pay gap
Now that the first cycle of gender pay gap reports have been published, it might be tempting to breathe a sigh of relief that the hard work is over. But for those companies which are committed to reducing their pay gap, the hard work has just begun, writes Gillian Maclellan, partner and employment law specialist at CMS
While the first reports may have been tricky for employers grappling with complex calculations and what payments should be included, the next set of figures will inevitably be scrutinised to see whether the pay gap has reduced, with the inevitable judgement being cast over whether their action plan worked?
Although there is no legal obligation to explain how to close the gender pay gap, many employers published action plans setting out measures to address it, ranging from the introduction of unconscious bias training to reviewing of their promotional structures.
Although the Equality and Human Rights Commission has a range of powers to enforce the law for those who fail to comply or produce inaccurate figures, arguably it’s the reputational aspect around the size of the gap relative to each sector that is the greatest concern. No company wants to be sitting with a gap that is considerably wider than their competitors. Here are five useful tips to help companies reduce any gap in the short term.
- Do what you say you will
Employers must ensure that any public or internal commitments they’ve made on addressing gender pay issues actually happen. Having an accountable, senior person take the lead on this should help ensure delivery. Companies need to highlight the amount of activity they’re undertaking to reduce any gender pay gap and set out credible timescales on when their plan is expected to make an impact.
- Impact assess pay increases and bonus awards
Carrying out a gender impact assessment or a similar type of exercise before your annual salary and bonus payments are confirmed is essential. Some companies have devised tools for managers showing them the impact of a pay increase on their gender pay gap figure. While this might not be possible for all employers, thinking about the impact of individual increases on the overall average may challenge accepted practices and identify new, more objective approaches.
- Review gender balance at all levels of the organisation
Most employers have explained that their pay gap is at least partly based on gender imbalance at different levels of the organisation, especially where there are relatively few women in senior management positions. However employers must look at all levels in their organisation: in roles where there are disproportionate numbers of one gender, taking active steps to recruit more of the other gender can have a significant impact on figures. This can be done by actively encouraging one specific gender to apply for roles in an environment currently dominated by their counterparts.
- Encourage flexible working amongst male staff
While it can be controversial, the prevalence of predominantly female part-time workers has an indirect impact on the gender pay gap as figures are based on actual remuneration received rather than being pro-rated. If this issue is addressed and promoted as part of a wider strategy to support employees with work-life balance, it can benefit both the individual men and an employer’s pay gap figure.
- Carry out a pay audit
It is important for employers to carry out an analysis of how they pay men and women for comparable work. This type of investigation can vary in size and scale from a full equal pay audit with external consultants to a lighter touch exercise involving a grade level analysis of pay based on gender. Keeping an open mind at the start of this exercise is essential. In our experience, no employer deliberately sets out to pay different rates of pay to men and women doing comparable work, yet through time, ring fencing, lateral hires and cultural issues, differences can arise. From a legal perspective the question is whether these differences can be justified according to a material factor defence under the equal pay provisions, or whether corrective action is needed. We are seeing an increased appetite for individuals to bring equal pay claims in the private sector. Companies, including those which are unionised, which have conducted a robust pay audit are more likely to avoid these claims and are better placed to defend themselves if they do arise.
The above tips should be seen as should be seen as complementary actions rather than substitutes to a longer term strategy which companies need to implement if they are to seriously address gender pay gap issues. Realistically change will take time and expectations should be managed about what is achievable in the course of one year.