Thought Leadership – Gender pay a name and shame disaster in the waiting

In our series of Thought Leadership posts Katherine Maxwell, Partner and Head of Employment at Moore Blatch discusses the Gender Pay Gap.

Smithians Foods relies on cheap female labour as its mostly male bosses pocket the cash.

Rest assured a headline like this will run in the press in April 2018. As readers will appreciate this headline is likely to be wrong and completely misleading, but nonetheless it’s likely to happen.

Currently, gender pay discussions are limited to publications such as Personnel Today, where the audience will understand and appreciate the requirements of gender pay and the differences between it and equal pay, but sadly that appreciation will be far less when you get to the broader media.

This article discusses some of the measures that companies should be thinking about where such a headline is possible, regardless of the fact that it’s misleading.

Key requirements

With data collection commencing, for any employer with over 250 employees, from the 5th April this year for private sector employers and 31 March for public sector employers, time really is quite tight. Reporting will be required one year later, for private sector employers on the 4th April 2018 and public sector employers on 30 March 2018, via a government website. It will also need to be on another searchable website, most likely the company’s corporate site, with the information available for three years.

Currently the legislation only applies to employees where a contract of employment, contract of apprenticeship or a personal contract to do work exists. So this will cover workers engaged under zero hour contracts and some self-employed contractors, those who are obliged to carry out the work personally.

Agency workers working for the relevant employer fall outside the rules if they are not being actually employed by the relevant employer directly. In addition LLP members are specifically excluded from the definition of a relevant employee by the regulations.

So, as it stands, some major so-called GIG employers will be exempt. That said, and as readers will know, HMRC has raised concerns over this business structure and tax revenues and thus I would not be at all surprised if in the fullness of time the regulations also apply here. Albeit as it stands the regulations state that information does not need to be reported where the employer does not have, or it is not reasonably practicable for the employer to obtain, the data.

So, what are the penalties for non-compliance?

There are no enforcement clauses in the regulations themselves. It has been said that the regulations will be reviewed in a few years to see if civil/criminal penalties should be brought in. The explanatory note to the draft regulations does however state that failure to comply with the regulations constitutes an ‘unlawful act’, empowering the Human Rights Commission to take enforcement action.

In addition if a company doesn’t report for any reason, for example they believe the figures are too embarrassing, then it is likely that the unions, press or other campaigners will have their say.

Similarly, there will be no process for checking the figures, however if an employee makes a point or starts a discussion about this, it is likely to be a protected disclosure and could ultimately create worse headlines… Smithians Food’s lies about gender pay to cover up pay bias.

Prepare for the name and shame headlines

So back to the headlines. The government has said that they plan to name and shame and publish league tables for the best and worst employers. The issue here being that without context ‘worst’ may be completely misleading and just reflects a business model that has evolved over decades and is no longer deliberately gender biased, but just has more women or men in certain pay groups due to historical factors that take time to change or indeed will never change.

For example, ‘joe public’ may not appreciate that employers that use call centres may have many more women working there, not due to any form of discrimination but the fact that this type of work allows flexible working hours that suits many mothers. There are countless similar examples.

Publically available information via the government site will be tabular and is likely to be the first port of call for many commentators. However, our advice is to replicate this information on your own website, but providing context, such that a reader can understand and appreciate the information.

In addition, our advice is to calculate your figures now, so you can see the likely results. Realistically, companies with ‘unfavourable’ results will fall into two camps, those where there is a genuine gender bias and those where the gender bias is a reasonable reflection of the company and its operations. However, it could also highlight a third issue – that of genuine pay discrimination, which is something that can be rectified before the data is captured.

Once you have the results and assuming that they are not 50/50 in all reporting categories then we would advise taking third party advice on how they are likely to be interpreted by people, organisations or the media that do not have your best interest at heart.

For some companies where potential issues are likely we would suggest that as much effort goes into planning for the possible outcomes, as that goes in to the primary data collection itself. Collating the supporting data is likely to be fairly resource heavy.

As a minimum you should make sure that your website, and commentary around the reported data, includes your employment policies on equal pay, recruitment, career progression, flexible working policies and uptake. It may also be advisable to contextualise issues such as gender recruitment over the last 5/10 years to show that where a historic gender imbalance exists this is being addressed.

Finally, and as an employment lawyer, one would expect me to say this, we would recommend engaging a third party to, at minimum, play the part of a protagonist – better for this to happen in a controlled environment and ahead of any potential tabloid splash. Additionally they can plainly help in best positioning the issue and recommending what steps, if any, are going to be taken to address them.

A summary of the reporting guidelines and pay calculations can be found at mooreblatch.co.uk