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South West

How will you be affected by the Gender Pay Gap legislation?

18 May 2017

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Gender Pay Gap – Should I be bothered?

There is so much in the media at the moment about the pay gap between men and women, with politicians of all hues pronouncing regularly their good intentions to close it. However, 47 years after the first Equal Pay Act came into force, we still have a gap calculated by the Office of National Statistics as 18.1% across the whole workforce, and 9.4% when only full time employees are considered. When you look at the statistics for earlier years, you can see that it is creeping down, but the pace of change is glacial.

It’s against this background that the government has legislated to require every business employing over 250 staff to publish gender pay gap figures for the business by April 2018. It’s a Coalition Government idea that has survived a turbulent parliamentary period, essentially because everybody agrees that reducing the gap is a good thing, and nobody has any clear idea of a more effective way to go about it.

If you’re a big employer, then, this will already be on your radar. You may well have conducted an audit and perhaps taken advice on how to improve your figures going forward. But many, if not most, of the people reading this piece aren’t in that situation. If the reporting obligations don’t apply to you, should you care, and what can you do?

The first thing to say is that there is absolutely nothing to stop you from publicising your figures as a smaller organisation. If, as intended, the gender pay gap figures become a benchmark of corporate responsibility then there will distinct commercial advantage (particularly in areas such as recruitment and tendering) for those who have a low gap to report.

Where the story is less positive, smaller businesses can view this as a period of opportunity to work out the underlying reasons for their gap, and perhaps begin to take steps to improve the picture. Having a pay gap doesn’t necessarily mean that you are at risk of equal pay claims – although it is a warning flag. It might indicate that your organisation is struggling to attract or recognise female talent, or that it could do more to support women returning to work after career breaks, or that it tends to recruit into ‘gender ghettoes’ with certain roles almost exclusively filled by either men or women. All of these situations can be detrimental to commercial performance, as well as potentially leading to employment law issues. 

Whilst there are statistical issues with analysing the pay gap amongst very small groups of employees, there is credible speculation that if the reporting obligation is seen as a success it is likely to be rolled out to smaller employers, perhaps down to headcounts of 100 or even 50.

At the IoD, we have a spent many years working towards greater female representation on boards and helping empower women members to achieve their career potential. Many of the same factors – both social and organisational – that create obstacles for female progression also contribute to the gender pay gap and, whilst the reporting obligations are far from a perfect solution, let’s hope we start to see some progress in the right direction.


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