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Gender Pay Gap Reporting – the Unexpected Consequences for UK plc

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Comment from Chris Blundell, Employment Tax Director, MHA MacIntyre Hudson:

“The intentions behind the new regulations are clearly good; however, measurement doesn’t guarantee full gender equality. Corporate complacency must be dealt with, but because the Government hasn’t introduced sanctions for failing to comply, bad employers can escape the regulation by simply ignoring it.

“The only real leverage will be purely reputational: the embarrassment and potential naming and shaming of the companies with 250+ staff that don’t publish the statistics, or whose reports show large inequalities. Although it’s initially a ‘light touch’ regulation, employers can expect additional requirements in the future.

“For some companies it will be difficult to provide accurate figures, as they have to include self-employed contractors, where they may not have full details. Although the first pay reference date is 5 April 2017, employers will need to provide data for bonuses paid since April 2016; however, records may be patchy as the regulatory requirements to provide this information were not introduced until October 2016, and companies may not have been recording this information.

“Gender pay gap reporting will cause dissatisfaction in the workforce and increase the disconnect among staff. Employees will be able to see not only if men are better rewarded than women, but also the average bonus gap and the proportion of women who receive bonuses compared to men. It could also show that disparity is most apparent in the highest paying jobs, with the inference that this is the senior management. Companies will therefore need to prepare accompanying explanations to try to limit staff dissatisfaction.”

“Gender pay gap reporting is another regulatory burden for businesses, on top of a host of other changes such as Pay as You Earn (PAYE), auto-enrolment and immigration. It’s also another cost for employers, particularly at a time of major economic and political uncertainty.”

Comment from Andreja Ivančič, HR Consultant and member of MHA MacIntyre Hudson’s HR Solutions team:

“Employers are concerned that the results of the calculations will reveal sizeable gender pay gaps in their organisations, and that this will be interpreted as unequal pay; however, gender pay gap and equal pay are not the same and the reality is that some sectors and jobs, such as construction, are simply more attractive to men than women. While this doesn’t mean that companies are breaking the equal pay legislation, employers could be unfairly stigmatised.

“A lot of employers don’t realise that, despite their size, they might not be covered by the regulations, as the 250 + employees threshold applies only to single entities. Groups are currently not required to aggregate their employees when assessing if they have passed the threshold. Regardless of size, however, all companies should be encouraged to consider reporting and its advantages.

“Faced with unprecedented public scrutiny on this issue, brands which fare badly in the reporting will be hedging their bets about the timing of their data release. Employers have one year to release the data, but we expect those with low gender pay gaps to publish early. In contrast, those firms with a higher gender pay gap are likely to be more hesitant, watching the media reactions anxiously and then choosing their moment to release their own data.”