Gender pay gap reporting: One year on

Co-authored by Rachael Brenchley, Trainee, Employment Team

The deadline for private sector companies with more than 250 employees to submit their gender pay gap data was 4 April 2019. The results are in, and demonstrate that whilst some improvement has been made, there is still a long way to go in closing the gap. The snapshot date for 2020 reporting (5 April 2019) has also passed.

The results

Compared with last year’s results, 48% of companies had decreased the pay gap within their organisation; however the pay gap had increased in favour of men in 45% of companies, and stayed the same for the remaining 7% of companies.

Overall in the 2018-2019 reporting period, 78% of companies still had a pay gap in favour of men, 14% of companies had a pay gap in favour of women, and the remaining 8% of companies did not have any pay gap.

The sectors with the biggest discrepancies between male and female pay were construction and finance.  Results are not just published on a company’s own website but also on a government website which has the facility to allow comparisons to be made easily.

What do the results mean for employers?

For all those reporting in 2018, it was largely a year of unknowns. However, it set a benchmark for future years, not only for the company itself, setting a base point from which to seek improvement but also a point of comparison against industry competitors. A company which has a significant gender pay gap risks suffering reputational harm and media criticism as a result. If the gender pay gap worsens, when the focus is on reducing the gap it could make recruiting and retaining female employees more difficult if they perceive that one of the reasons for a worsening pay gap is the lack of available career progression for women. The availability of year on year comparisons will enable existing and prospective employees to gauge an employer’s commitment to closing the gender pay gap.

However, proactive, forward thinking employers can use the results from within their company to open a dialogue to understand and address the differences in pay within their workforce and engage in initiatives help improve it. Meaningful and transparent steps to reduce the gap can be used positively to demonstrate an employer’s commitment.

A gender pay gap does not mean that men and women are paid different amounts for performing the same role (which is discriminatory.) It is important to remember that there may be innocent reasons to explain a pay gap within a company. For example, it may have proven to be difficult to recruit women to senior roles within a particular industry, or there may be a high proportion of female part-time workers within the company.  Where there are innocent reasons for a gender pay gap, or there are active and positive steps being taken to shrink the gap, those initiatives should be made clear in the accompanying report.

The narratives which accompany the gender pay gap results give an opportunity for employers to provide an explanation for the results within their companies. It is also a chance for the employer to state the steps they have started to take, or are planning to take, to resolve the inequality and improve diversity within the workforce. This promotes transparency and accountability.

What can employers do to narrow the gap in time for next year's deadline?

Clearly ‘fixing’ the gender pay gap in the UK will not happen overnight, and requires systemic changes in attitudes and policies. However, there are steps that employers can take in order to improve their own gender pay data each year.

For example, an employer could ensure that senior managers are shown to be encouraging flexible working, to give female employees the chance to engage in well-paid roles as well as fulfilling family commitments. Alternatively, employers should look at ways of ensuring that part-time workers are more able to take advantage of promotions and chances to progress within the organisation.

On 8 February 2019, the Government Equalities Office issued two guides to employers to help tackle gender pay gap issues. ‘Eight ways to understand your organisation’s gender pay gap’ enables employers to identify and understand the reason for their pay gap, and ‘Four steps to developing a gender pay gap action plan’ gives employers guidance on how to begin addressing the gap.

The introduction of mandatory gender pay gap reporting has already led to significant improvements in the discrepancy between the pay of men and women, due to the spotlight it places on companies. Employers should be considering what steps they can take to ensure that the gender pay gap within their organisation does not attract attention with employees, potential candidates and the wider public for the wrong reasons.

Those who do not currently have to report (due to having less than 250 employees) should consider whether they have a positive and compelling story to tell about their gender pay gap. Perhaps a voluntary gender pay gap report is something which can be used to its advantage in attracting talented individuals to it rather than, potentially, to a larger better known competitor.