On 1 August 2018 the Government Equalities Office (GEO) confirmed that 100% of employers covered by the new gender pay gap reporting obligation have now published their first report (disclosing data as at April 2017). The Equalities and Human Rights Commission noted that it would now be turning its attention to the accuracy of reporting, amidst suggestions that as many as one in six organisations may have reported incorrectly (see here).
The GEO also published new guidance on the effectiveness of various approaches to reduce the gap, in order to help employers create more effective action plans (although of course the specific actions adopted should be tailored to the particular causes of an individual employer’s gender pay gap). The actions on which there is evidence indicating a positive impact are:
- Including multiple women in shortlists for recruitment and promotions (although bear in mind that positive discrimination is unlawful)
- Using skills-based assessment tasks in recruitment, rather than relying only on interviews
- Using structured interviews for recruitment and promotions to ensure each candidate is given the same experience, and grading the responses using pre-specified standardised criteria
- If salary is negotiable, making this clear and showing salary ranges
- Introducing transparency to promotion, pay and reward processes to encourage objective, evidence-based decision-making
- Appointing senior level diversity managers/task forces with the ability to review data and ask for decisions to be justified.
Other actions which are considered promising, but which require further research to improve the evidence base, are:
- Improving workplace flexibility for men and women: advertising all jobs as having flexible working options, encouraging senior leaders and men to work flexibly
- Encouraging the uptake of shared parental leave by men and women equally, by enhancing pay at the same level as enhanced maternity pay and publicising the rights and their exercise by senior leaders
- Recruiting returners, offering mentoring and sponsorship, and offering networking programmes
- Setting internal targets to reduce the gap, which are specific and time-bound.
Interestingly, there is evidence that certain actions commonly adopted by employers can in some cases have a negative impact, possibly due to the way in which they have been implemented. These include unconscious bias and diversity training – the guidance states that there is currently no evidence that this training changes behaviour long-term and in some cases may even backfire by causing resentment or complacency. More evidence is also needed to understand the impact of leadership development training for women, different performance assessment models and diverse selection panels.
The recommended actions mirror some of the conclusions of the Institute for Public Policy Research in its report “The State of Pay: demystifying the gender pay gap” published in May 2018. That report made four main recommendations:
- Policies around pay negotiation should be re-thought – options include ruling out negotiation altogether, publicising the ability to negotiate or allowing a colleague to negotiate for the individual, or committing to pay all employees on the same level at least as much as any new recruit
- Introduce a more structured approach to progression, to counteract women’s lower propensity to put themselves forward
- Encourage more men to work flexibly and take time out for caring responsibilities. “To reduce the gender stratification of full and part-time roles, and reduce the maternity penalty, employers could introduce dedicated, paid paternity leave on a ‘use it or lose it’ basis, advertise roles as flexible by default, and encourage men to partake in job share arrangements.”
- Publish narrative reports alongside pay gaps, to ensure that the focus is not exclusively on the pay gap numbers. The Institute notes that an exclusive focus on the figures could encourage employers to take undesirable actions to reduce their gap (eg, by outsourcing low-paid roles), while desirable behaviours promoting genuine equality over the long run may increase the pay gap in the short-term (eg, recruiting more women graduate trainees). The report also suggests that additional workforce data would be helpful, including the numbers of men and women working flexibly, the total numbers of men and women, and the average length of service and turnover for men and women.
The Women’s Business Council has also published a toolkit on closing the pay gap, aimed at CEOs and business leaders at FTSE 350 companies. This recommends the promotion of flexible and agile working and shared parental leave.
Many employers will already have collected their April 2018 data and know whether their gender pay gap has moved at all – and in which direction. Given the likely media interest in the second year’s figures, employers may want to review the above guidance to see what more they could consider doing to improve their figures and perhaps include some of the recommendations in an action plan to be published with the data.