As we approach the 16-month anniversary of the introduction of legislation in the UK, requiring organisations with more than 250 employees to publish the difference in pay between men and women, a gap persists.
There is a clear earnings penalty for women in many sectors and industries, across a myriad of different professions and occupations.
Following the UK introduction of pay auditing and reporting, there are significant lessons that can be learned from our nearest neighbours’ experience that serve as timely reminders for Irish organisations wishing to prepare in advance of the introduction of similar legislation in Ireland.
Start early and allow enough time to prepare
By allowing enough time, this will ensure that an organisation understand what information is required under legislation and ensures that the correct data is available and accurate.
Within the UK, many companies took a long time to prepare their data. Also, requirements in many cases were unclear, and there was confusion between equal pay and gender pay.
Many organisations had difficulty in producing the figures, and this resulted in an estimated 1 in 6 employers reporting their gender pay gap figures incorrectly.
Develop a narrative
Although it was not required under legislation in the UK, many organisations took the opportunity to include a narrative with their submissions.
This included details of a clear action plan on how to tackle a gender pay gap, which can provide valuable reassurance to stakeholders internally and externally.
Take action to close the gap
As outlined, many UK organisations included a narrative with their submissions, which included an action plan.
It is recommended that once figures are reported (or before if possible), an organisation puts in place a realistic plan that can be actioned in time for the following year’s reporting and regularly report on progress to stakeholders.
Non-compliance with the reporting requirements was an issue for numerous organisations during the gender pay gap reporting process.
The subsequent action was taken by the Equality and Human Rights Commission (EHRC), against non-compliant organisations, including threats of legal action to ensure compliance.
Organisations were not given enough notice of such consequences before the reporting deadline.
Implications for non-compliant employers have still not been finalised for the next reporting period. However, there are proposals for non-compliant organisations to receive a fine.
UK organisations were only permitted to submit their gender pay information in their report.
There have been calls for organisations to be allowed to include a narrative in their reports which may provide context on why a gender pay gap exists in their organisation, similar to the reasons for the gender pay identified by the European Commission.
Additionally, there are proposals for organisations to include an action plan with clear objectives which can be measured year on year.
Under the UK gender pay legislation, equity partners in professional service firms were not required to report on their gender pay data, leading to negative publicity and many professional service firms producing their data retrospectively.
In some instances, the gender pay gap rose by 20% when equity partners were included.
The model of calculation used by the UK Government was criticised by many, particularly about:
- ordinary pay and bonus calculations
- the fact working out variable hours is too complex
- regular pay should be based on pre-salary sacrifice figures
- bonus payments should be excluded from ordinary pay gap calculations
- bonus pay elements should be simplified and calculated on a pro-rata basis, with clearer guidance for calculation
It is expected that the Irish government will utilise the Australian model for calculating gender pay data when gender pay gap reporting is implemented.
Communicate proactively with internal and external stakeholders
Some UK organisations did not communicate with stakeholders, particularly employees, before their reports being made public.
Failure to communicate with employees could lead to a negative impact on engagement, morale and productivity if the results showed a significant gender pay gap. Therefore, it is essential to adapt your communication on to your specific stakeholders.
A strong diversity and inclusion policy doesn’t mean a small gender pay gap
As seen in the UK, some organisations previously praised for their records on diversity and inclusion also had gender pay gaps.
The noise made around diversity and inclusion can hide an organisation’s failure to tackle the systemic issues around whether or not women are being paid fairly and being considered for promotion and being promoted.
Therefore, it is vital that organisations commit to transparency around pay and progression.
As evident in the UK reporting, specific sectors such as financial and insurance services and construction reported unusually large gender pay gaps.
This can often be attributed to occupational segregation. Therefore, organisations within these sectors may be encouraged to collaborate with third level institutes to improve their sector appeal and help women to undertake relevant qualifications.
The experience and data emanating from the UK show that the gender pay gap persists and, worse, in some sectors, the gap has widened since first reports were published in April 2018.
This reinforces the reality that equality will not be won by waiting, and what fails to be measured will fail to be managed.
Sonya Boyce is the Senior Manager in HR Consulting at Mazars.