The Lingering Gender Pay Gap

Mon, 24 Aug 2015

Jessica Smeaton looks at the government’s new consultation paper and the impact on large employers.

Is it really still a problem?

In modern Britain, 45 years since the Equal Pay Act, women on average still earn less than men. In 2014, according to the ONS, the gender pay gap for full and part time employees was 19.1%

The accountancy firm Deloitte recently revealed that it pays women on average 17.8% less than its male workers, although the gap between men and women in the same grade of job narrowed to 1.5%, raising the question of whether the issue is really about equal pay for equal work or increasing the representation of women at senior level and in highly-skilled roles. The difference between the sexes in UK managers’ pay equates to nearly two hours of unpaid work a day by women. So yes, it really is still a problem.

Why?

That’s a harder question. Women are still more likely than men to work part-time due to childcare responsibilities. Part-time work, in general, pays less well per hour than full time work. When part-time work is taken out of the equation, the gender pay gap for full-time employees falls to 9.4%, but even that figure is unacceptably high. Occupational segregation is partly to blame (78% of those working in health and social care, a typically low-paid sector, are women) but outright discrimination is still a major factor.

What can be done?

Redress to the Employment Tribunal is one option in clear cases of discrimination over pay. One of the highest tribunal awards in 2014 was in a sex discrimination cases. In Williams v Ministry of Defence a former RAF nurse at a Birmingham hospital was awarded over £550,000 following a successful claim for sex discrimination in respect of her non-promotion.

Employers who lose equal pay claims at Tribunal also face the prospect of being compelled to carry out an equal pay audit, the results of which must be published online (Equality Act 2010 (Equal Pay Audits) Regulations 2014).

With the number of single tribunal claims received in January to March 2015 25% fewer than the same period in 2014, however, the future effectiveness of the Tribunal in reducing the gender pay gap is in doubt.

Last month, the government announced that it will legislate to require companies with 250 or more employees to publish information and statistics relevant to the gender pay gap. The precursor to that move, the voluntary disclosure initiative which was launched by the coalition government in 2011, signed up hundreds of companies but succeeded in getting a only a handful to publish data.

Under section 78 of the Equality Act 2010 the government has the power to make regulations requiring employers to publish information relating to the pay of employees for the purpose of showing whether there are differences in the pay of male and female employees.

Penalties for non-compliance will range from the issue of a notice requiring compliance, to civil enforcement (financial penalties) through the county court. But with section 78 of the Equality Act 2010 providing for a maximum fine of £5,000 for non-compliance, it is questionable whether such enforcement action is likely to make a difference to large, successful companies.

It appears that the government has no plans to focus solely on litigation (whether in the tribunal or the county court). The consultation document itself devotes a whole chapter to ‘wider work to close the gender pay gap’. Interestingly, on 11 August the Government Equalities Office hosted a roundtable to discuss the issue and present at that event was Kate Glazebrook of the government’s Behavioural Insights Team (BIT).

The BIT is unofficially known as the ‘Nudge Unit’. Originally set up within the Cabinet Office and now a limited company, it works to apply nudge theory (behavioural economic and psychology) to try and improve government services. The idea being that positive reinforcement and indirect suggestions to try and achieve non-forced compliance can influence the motives, incentives and decision-making of groups and individuals at least as effectively as direct instruction, legislation or enforcement. The publicity surrounding the publication of figures, for example, could be much more harmful than financial penalties.

What does the future hold?

With the figures still at 19.1%, encouragement may have had its day. Time to resort to a more robust approach? The government’s consultation will close on 6 September 2015 and regulations are expected to appear as early as 2016. Any responses should be submitted using the online system at https://dcms.eu.qualtrics.com/SE/?SID=SV_0ppaSxAXdKa6UJv.

If the regulations go ahead as expected, those representing employers should anticipate an increase in requests for advice on the nature and extent of the duty and how to navigate the civil enforcement scheme if and when things go wrong.

No5 employment barristers have extensive experience with the civil penalty scheme for employing illegal workers and anticipate a significant cross over with the new scheme.

Jessica will be participating in a debate ‘the remaining gender pay gap is here to stay’ with Alexander Mellis, Tim Sheppard, Richard Hignett and Gemma Roberts at the No5 Annual Employment Seminars, held in Birmingham on 2 October and London 16 October 2015.

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