What's New for Gender Pay Reporting this year?
Last year employers with 250 or more employees published their first Gender Pay Reporting figures, with deadlines of 30 March for the public sector and 4 April for the private and voluntary sector. As the 2019 deadline for the second set of data looms, based on the "snapshot date" of either 31 March or 5 April 2018 respectively, what developments do employers need to know about since last year?
The first thing to note is that with little fanfare and little time to spare, on 7 February 2019, Acas and the Government Equalities Office (GEO) published updated guidance on gender pay reporting. If you are an affected employer and had saved the previous link, the new guide can now be found here. No real substantive changes have been made to the guidance, but it's worth working off the latest version nonetheless.
Then on 8 February 2019, the GEO published two sets of guidance to help employers close their gender pay gaps:
- Eight ways to understand your gender pay gap: This short piece of guidance focuses on specific elements of employment from recruitment to termination to help employers identify the policies that may be contributing to their gender pay gap – for example, do people get stuck at a certain level within the organisation? Is there gender imbalance in promotions? Are women more likely to be recruited into lower paid roles? Are you doing all you can to support part-time employees to progress?
- Four steps to developing a gender pay gap action plan: This even shorter publication is based on feedback from employers with effective action plans in place relating to consultation and engagement – involving staff at all levels but making sure you get buy-in from those at senior levels.
Since one of the recommendations of the "Four steps" guidance is to allow enough time to develop and embed an effective action plan, and this guidance was published less than 2 months ago, it is unlikely to have an effect on publishing any kind of thoughtful action plan to reduce pay gaps for this year's reporting. However it could provide ideas of aspirational narratives that organisations can add to their reporting if they have not reduced their gender pay gap from last year, or are reporting a wider pay gap. In December 2018, the Equality and Human Rights Commission urged employers to provide narrative plans (currently voluntary) alongside gender pay gap information.
Prior to this, in August 2018 the GEO produced “Reducing the gender pay gap and improving gender equality in organisations” with various recommendations to reduce the gender pay gap:
- Including multiple women in shortlists for recruitment and promotions
- Using skill-based assessment tasks in recruitment
- Showing salary ranges to encourage salary negotiation
- Having transparent promotion/pay/reward processes
- Appointing diversity managers/diversity task forces
On 20 February 2019 the BBC published a report revealing that of the 10% of private sector employers that had at that stage published their latest gender pay gap reports, 1,146 companies reported a median gender pay gap of 8.4% - an improvement from 9.7% last year. However 4 in 10 companies reported wider gaps than last year.
The pay gap is at the lowest level ever but the gap is closing slowly and the TUC has called for companies to be legally required to explain how they will close the gap.
Interestingly, on 28 February 2019, the Guardian published an in-depth analysis of gender pay submissions. It found instances of inaccurate reporting and mathematically impossible figures. It also reported that more than 30 companies are yet to file accurate data for the previous 2017/18 period. The Guardian stated that before the deadline last year a number of companies had reported “mathematically impossible results, with gender pay gaps of more than 100%. Some companies had entered zeros in all fields, reported mathematically impossible bonus gaps and removed key workers from their figures.” It noted that 35 had still not changed those figures since last year’s deadline. The article suggested that lack of sanctions in the gender pay reporting regulations risked making a “mockery” of the system.
This is not the first time the question of enforcement has been addressed. In January 2018, Blake Morgan was quoted in the Financial Times and on Radio 4's Today programme as questioning the enforcement powers of the EHRC to impose fines or sanctions to employers who did not report their gender pay gap or did not report it accurately. Our concerns were confirmed in a Business, Energy and Industrial Strategy Committee (BEIS) report from 2 August 2018:
“The other potentially significant factor that could undermine the new reporting regime is the potential lack of effective sanctions by those who do not comply or provide inaccurate figures. The Regulations do not explicitly make provision for enforcement and sanctions, although the Equality Act provided that such sanctions may be included. Instead, reliance is placed on the enforcement powers contained in the Equality Act 2006, under which the ECHR may seek a court order to enforce compliance against those committing unlawful acts under that Act and impose unlimited fines. The absence of explicit sanctions in the Regulations have given rise to doubts about whether breaches of the Regulations could be enforced using the powers under the 2006 Act…Until any enforcement actions are tested in the courts, the legal position remains uncertain.”
The BEIS Committee report concluded:
"The investigatory and enforcement mechanisms available to the EHRC are not suited to the relatively straightforward task of securing the submission of specified data by a required date. The then Government was remiss in failing to provide legal certainty as to the available enforcement mechanisms and sanctions for breaches of the Regulations. The inclusion of an explicit power to fine in the Regulations would have been a straightforward remedy…. We recommend that the Government, at the next available opportunity, ends the legal uncertainty surrounding the ECHR’s enforcement powers by providing for specified fines for non-compliance.”
In the same report the BEIS Committee also recommended:
- Extending reporting obligations to companies with 50 or more employees
- A mandatory narrative explanation for pay disparity, accompanied by an action plan to tackle the gender pay gap (currently optional)
- Including partner remuneration from traditional partnerships and LLPs in the figures
- Changing the current requirement to report on salary quartiles to salary deciles (allowing for a more nuanced analysis)
- Clarification of current areas of ambiguity and revised guidance dealing with ambiguous areas, for example on how bonus figures should be calculated.
The Government’s response on 17 January was to reject all of these proposals and, as regards enforcement, it stated: “The ECHR’s ongoing enforcement and engagement work meant that, in August, the government was able to announce that 100% of employers identified as being in scope of the regulations had now published their information."
As the Guardian's analysis shows, however, publishing information and publishing accurate information are not the same thing. Nonetheless, it is unlikely that any further changes will be made in the near future. It will be interesting to see this year's figures when they are all published.
Blake Morgan has a specialist Equal Pay and Gender Pay Audit team combining employment lawyers with our HR Consultancy team and benefitting from significant legal and practical experience. We can assist you in carrying out gender pay reporting or general equal pay audits, whether to comply with your statutory duties, to protect you from claims or simply to ensure you are adhering to best practice as a responsible employer. Our gender pay reporting experts can guide you through these issues – please do not hesitate to contact a member of our team if you would like assistance.