Are you Aware of the new Pay Gap Reforms?

The Gender Pay Gap is the overall difference (including part-time and full-time work) between male and female employee salaries, and as of April 5th, 2017, 9,000 UK businesses must document any and all wage differences amongst their employees.

This is estimated to affect around 15 million working people, and if employers fail to accurately disclose all information regarding pay differences by April 2018, they may face serious penalties.

The Gender Pay Gap is not the same as the Equal Pay Act.

The Equal Pay Act expressively prohibits employers opting to pay staff who work in the same role different wages regarding their gender, whereas the Gender Pay Gap is concerning the difference in salaries for men and women in contrastive roles, and over a longer period of time.

Pay Gap

The Equality Act of 2010 also makes it an offence to hinder employees from having discussions to determine if they are receiving different pay, should they have the suspicion.

Why is there a Gender Pay Gap?

Determining why the Gender Pay Gap exists is difficult without involving female stereotypes, but it is arguable that tradition and stereotypes do play a huge part in why a lot of women work in lower-paid jobs/face career breaks.

Women typically have less work experience than men due to breaks in their career, such as having children and partaking in part-time work.

Pay Gap

Industries such as child care, hospitality, cleaning and secretarial work are predominantly populated by female staff; however, the average rate of pay in any of these roles is significantly lower than in jobs typically carried out by men (such as construction, IT and engineering ). Women make up a mere 10% of the staff within highly skilled and better-paid jobs.

Despite this, the Gender Pay Gap in the UK is considerably low (18.1%) in comparison to other countries, such as Korea for example, who’s Gender Pay Gap is an immense 36.7%.

The Ethnicity Pay Gap

A study by The Fawcett Society found that gender is not the only major factor which affects pay/career progression in the UK. Bangladeshi and Pakistani women face the biggest overall pay gap at 26.2%. From looking at the report, Fawcett Society chief executive, Sam Sethers, concluded: “Black African women have largely been left behind, and in terms of closing the Gender Pay Gap, Pakistani and Bangladeshi women are today only where British white women were in the 1990’s”.

Pay Gap

Liberal Democrats call for Change

Recently, the Liberal Democrats announced a call to action regarding publishing any statistics on the ethnicity pay gap in the same manner as the Gender Pay Gap statistics. Former Lib Dem leader, Tim Farron, said: “It is shocking that in 21st Century Britain inequality that comes down to race still persists.”

They addressed the issue of transparency in the workplace, and former Minister Jo Swinson stated: “It is true that a gender pay gap does exist but whilst organisations are allowed to get away with keeping patchy records we will never know the full extent of the gap”.

Under this rule employers with more than 250 members of staff would be obligated to disclose figures on roles and wages, including matters such as LGBT levels, gender and ethnic minorities.

UK Prime Minister Theresa May also backed up this statement weeks later, vowing to tackle ‘injustice’ in the workplace. She also explained her plans for raising the national living wage by 2022.

Penalties for Failing to Review Pay Gaps

A new study by TotalJobs revealed that 85% of employers, out of 145, were not reviewing their gender pay gap or equality policies despite the passing of the new law. A separate survey carried out by NGA Human Resources published that 29% of company bosses did not feel the gender pay gap was important, and 14% of male respondents did not think having a plan in place was necessary.

The Minister for women and equalities, Justine Greening explained that they did not wish to impose harsh sanctions on employers for failing to comply, commenting “We’ll keep an open mind about whether we need to go further in terms of sanctions and regulations, but the important thing is to win over hearts and minds”.

Employment Law advice

Research by the Law Society in 2009 discovered that 92% of the pay gap in private practice can be justified by individual employee attributes, such as experience or practice area. This leaves room to question if that remaining 8% can be explained by discrimination.

As an employer, you now have the duty to explore and report on any gaps in the salaries of your staff by April 2018. By this date, you should have published your findings in an easily-accessible place such as your website. 

Not paying employees the same wage when they work in the same role is unequivocal discrimination, and if you are found to be guilty of such a crime, you could be made to pay thousands in compensation.

Contact PeoplePointHR today for professional and tailored advice on any employment matter, and receive expert and reliable guidance from our employment law advisers to ensure you are compliant with all aspects of employment law.