GENDER PAY
Commission outlines new gender pay reporting proposals
Employers that choose to analyse and report publicly their gender pay gaps will receive "limited immunity from investigation", the Equality and Human Rights Commission has announced today.
As part of the Commission's drive to increase gender equality in the workplace, this “unprecedented step” aims to encourage businesses to adopt voluntary measures to analyse and make public their gender pay gaps. The Commission has today released proposals outlining the voluntary measures organisations with more than 250 employees can use to publish information on pay differentials between men and women.
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Consultation process and research findings
The proposals come in the wake of a consultation process led by the Commission and involving representatives from the CBI, TUC and other stakeholders including business, the voluntary sector, trades unions and equal pay experts. The government has requested the Commission to work with these key stakeholders to develop metrics for reporting and publicly sharing this information on a voluntary basis.
The Commission has consulted with business and voluntary sector employers, industry bodies, trade unions and equal pay advocates to ask them what measurements work for them. They include the CBI, the British Chambers of Commerce, Business in the Community, EEF – the manufacturers organisation, the Chartered Institute of Personnel and Development, the Institute for Employment Studies, the National Council of Voluntary Organisations, the TUC, UNITE and the Women’s National Commission.
According to the Commission’s figures:
half of all employers view reducing pay discrimination as a high priority, with more than half of employers (57%) analysing or planning to analyse their gender pay gap.
only 9% of employers currently report pay gap information to staff outside of the human resource team.
one in five employers actively discourage or forbid discussion of employees’ pay.
IFF carried out a survey of 900 private and voluntary sector employers with more than 250 staff. The report is due to be published by the Commission shortly.
Evidence gathered for the Commission shows that far fewer private sector employers are taking action to close the gender pay gap. The Commission believes that increasing transparency is crucial to addressing the difference between what women and men earn.
The EHRC said: “Without the transparency offered by mechanisms which enable monitoring of the effect of corporate policies and practices on pay, organisations are at a disadvantage when it comes to tackling the issue.”
It added: “Transparency also brings a number of benefits in addition to its impact on differences between men’s and women’s pay. These include better quality decisions about reward and remuneration; employee confidence in the reward process and an enhanced corporate reputation. However, transparency does not mean that an individual has the automatic right to know what another individual earns and would not mean that employers would have to publish details of individual employees’ salaries.”
Proposals for publishing pay gaps
As a result of the consultation, the Commission is proposing a “menu of voluntary measures” to report on pay by gender, which organisations with more than 250 employees can choose from. These measures include:
the single figure difference between the median hourly earnings of men and women
the difference between the average basic pay and total average earnings of men and women by grade and job type
the difference between men’s and women’s average starting salaries.
The Commission is also offering employers an option to include a narrative of the causes of their organisation’s gender pay gap. This narrative would have to be combined with one or more of the quantitative measures:
Organisations with 250 to 500 employees are encouraged to opt initially to publish information measured by at least one quantitative indicator.
Organisation with more than 500 employees would be encouraged to report on two indicators, including a narrative.
Within the next two years, these large organisations would be encouraged to move to using at least three indicators, including a narrative.
As an incentive to companies to adopt these reporting measures the Commission is offering a limited degree of immunity from investigation for firms that participate. The EHRC said: “This immunity will not extend to anti-discrimination cases, but will mean that participating companies are unlikely to receive formal requests for further information during the next two years”.
The Commission will publish guidance on these proposals in April 2010. It will begin monitoring the take up of the metrics by large companies later this year, using a process that will allow encouragement and incentives for good practice; and provides a way of refining the proposed measures and methods of reporting with experience. Monitoring will be expanded to companies with between 250 and 500 employees next year.
Equality Bill
The Government’s new Equality Bill before Parliament contains a power which, if a future Secretary of State chooses to use it, could lead to mandatory reporting by businesses with more than 250 employees if progress has not been made on a voluntary basis by 2013. The Commission will be working with voluntary and private sector employers with 250 to 500 staff to advise on reporting their gender pay gaps. Research shows that there is limited gender pay gap understanding among medium-sized employers with the Commission working to raise the profile of the issue amongst this group.
CBI rejects proposals
The CBI business organisation has decided not to not to back the EHRC proposals regarding gender pay reporting, which are designed to help shape the Equality Bill currently going through Parliament. Katja Hall, CBI Director of Employment Policy, said: “Unfortunately we cannot support the EHRC’s current proposals. There is no disagreement about the need to address the lack of women in higher-paid jobs, but there is a disagreement about what will actually work, and what will backfire.”
The CBI argued that the publication of average salary figures for men and women, which could be made compulsory under the terms of the Equality Bill, could be misleading. "People could think that women are paid less than men in the same role, which is rightly illegal, when differences will actually reflect the proportions of men and women in higher-paid jobs."
Hall said: “The CBI put forward an alternative which would have enabled companies to report on progress towards gender equality in a meaningful way. Unfortunately the EHRC has missed a critical opportunity to propose a workable, effective policy, and the CBI has had to reject its report. However, we hope that a sensible and effective policy will ultimately emerge.”
A final word
“Transparency is really the first step to addressing the gender pay gap. If an employer doesn’t look at their own gender pay gap, how do they address it? By understanding that they have a gender pay gap problem they can start to take steps to address it. And, of course, it must make good business sense to be rewarding talented staff on merit and results rather than gender.” - Trevor Phillips, chair of the Equality and Human Rights Commission.
Want to know more?
The Equality and Human Rights Commission is a statutory body established under the Equality Act 2006, which took over the responsibilities of Commission for Racial Equality, Disability Rights Commission and Equal Opportunities Commission. It is the independent advocate for equality and human rights in Britain. To find out more visit www.equalityhumanrights.com.