An introduction
The Queen’s speech was delivered on 21st June 2017. The speech contained a number of implications for employment law. In her speech the Queen referred to making further progress in relation to the gender pay gap.
On average, women in Scotland earn £182.90 per week less than men. The gender pay gap in the UK economy as a whole stands at 18.1% according to the Office for National Statistics figures from April 2016. This represents the difference between the average hourly rate of pay for women compared to men, spanning the UK economy as a whole. Gender pay gaps also exist at a micro level within organisations.
This gender pay gap does not necessarily mean that employers are discriminating against women by paying them less for equal work, although this can be one of the causes. The causes of the gender pay gap are varied, including the impact of women taking time out of the labour market to have children or working part time to look after their children or the fact that women tend to be concentrated in lower paid occupational sectors such as the caring sector.
There was little indication in the Queen’s speech of any further legislation being introduced to accommodate this ‘further progress’ so what will eventuate out of this remains to be seen. However, there has already been development in this area this year. This article will look at the recent gender pay gap legislation introduced in April this year, and its potential impact on employers.
The equal pay gap
Equal Pay legislation was introduced by the Equal Pay Act 1970 which is now largely superseded by the Equality Act 2010. Equal pay legislation gives both men and women the right to claim equal pay and equal conditions of employment when they are performing ‘like work’ of equal value in terms of effort, skill, or decision making. An employer may defend an equal pay claim if they show the reason for the difference is due to a genuine factor and not based on the sex of the employee.
An employee who thinks they are not receiving equal pay can write to their employer asking for information that will help them establish whether there is a pay difference and if so the reasons for the difference.
If an employee cannot resolve the problem informally or through the formal grievance procedure, they can take a claim to an employment tribunal under the Equality Act 2010 while still working in the job or up to six months after leaving the employment.
The gender pay gap: new legislation
The gender pay gap differs from the equal pay gap as it is concerned with the differences in the average pay between men and women over a period of time no matter what their role is within the organisation.
Gender pay reporting legislation, with effect from April 2017, now requires employers with 250 or more employees to publish statutory calculations every year (with the first publication requiring to be made by April 2018) showing the pay gap between their male and female employees.
The legislation is contained within the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.
In particular, employers are required to publish:
- the difference between the average hourly rate of pay paid to male and female employees;
- the difference between the average bonus paid to male and female employees;
- the proportions of male and of female employees who receive bonuses; and
- the relative proportions of male and female employees in each quartile pay band of the workforce.
The information must be published on the employer’s website and also on a government website.
The impact on employers
Needless to say the large organisations affected by this legislation may not be particularly thrilled with this new obligation placed on them, for a number of reasons.
The BBC fought against their gender pay gap information being published, claiming that it would drive up salaries in the media industry. They published their gender pay gap figures this week, causing a media frenzy, when it revealed a significant gender imbalance. Within their list of 96 highest earners, only a third were women and the top 7 were all men. Chris Evans was found to be the BBC’s best paid star, collecting at least £2.2million in the last financial year whilst Claudia Winkleman, the best paid female star, was paid a fraction of Evans’ salary at between £450,000 and £500,000.
The stark contrast in wages between male and female employees received comment from Theresa May who accused the BBC of paying women less than men for doing the same job. This publication could lead to a number of female stars pursuing claims for equal pay and sex discrimination.
Non compliance with the new legislation
There are no civil or criminal penalties for employers if they do not publish their gender pay gap data. This has caused some commentators to accuse the new legislation of not going far enough and having a ‘lack of teeth’.
The intention seems to be that employees, unions, the media, customers and shareholders will apply sufficient pressure to non-compliant organisations and the government has stated that it may publicise the identity of employers if they have not complied.
The Equality and Human Rights Commission has confirmed that non-compliance with the 2017 Regulations would be an ‘unlawful act’ for the purposes of the Equality Act 2010. This means that it has the power to take enforcement action. However, whether the Commission will take any action for non-compliance remains to be seen.
Preventative action
Employers may be concerned that publishing these gender pay gap figures could lead to a rise in potential equal pay and discrimination cases against them.
Employers are advised to plan ahead. Analyse the figures to identify what the potential causes of the gender pay gap are and consider what measures can be taken to narrow the gap.
Whatever measures the employer takes, it is important to be realistic and to acknowledge what is not achievable and cannot be changed, at least in the short term, as well as what is achievable and can be changed.
The gender pay gap and the road to equality continues.
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Note: This article was initially published on the Moray Employment Law website – in July 2017.
