LawFlash

UK Publishes Guidance for Employers to Close Gender Pay Gap

February 21, 2019

The UK’s Government Equalities Office (GEO) published two sets of guidance on 8 February to help employers understand, address, and close their gender pay gap (GPG).

These are:

  1. Eight Ways to Understand Your Gender Pay Gap, which aims to help employers understand the root causes of pay discrepancies between male and female staff in their organisations (from recruitment to termination); and
  2. Four Steps to Developing a Gender Pay Gap Action Plan, which is based on feedback from employers with effective action plans in place, and specific steps for developing a gender pay gap action plan.

These two sets of guidance have been published following GEO’s research published on 21 January 2019 on employers’ understanding of the gender pay gap and actions taken to reduce the GPG. The research showed that the percentage of large employers developing GPG strategies, and having a good understanding of the potential causes of the GPG had increased since 2017.

Eight Ways to Understand Your Organisation’s Gender Pay Gap

This guidance seeks to understand the specific causes of imbalance by asking eight key questions to help organisations identify different potential causes of the GPG. The guidance is intended to aid the collection of, or understanding of preexisting, workplace data in relation to the following eight questions:

(1) Do people get “stuck” at certain levels within your organisation? The guidance recommends organisations go further than simply report on pay quartiles as part of GPG reporting, and to examine the gender balance within their seniority structure, as well as the job types and departments.

(2) Is there a gender imbalance in your promotions? The guidance recommends that employers should compare the gender ratios in each grade against the gender ratios of those that apply for promotions, ideally reaching a result whereby the proportion of men against women applying for promotions should reflect the proportions in each grade. Employers may wish to look at internal recruitment, and promotion processes separately (including the applicant pool, assessment, and who is selected), to establish if there are any gender imbalances as candidates’ progress through the internal progression stages.

(3) Are women more likely to be recruited into lower paid roles in your organisation? Employers are encouraged to scrutinise the proportion of female applicants for roles at each level within the organisation by examining the proportion of women: (i) applying for positions; (ii) making it through to an assessment stage or shortlist; (iii) being selected; and (iv) accepting roles, and whether the proportion of women decreases throughout the stages. If a gender imbalance does exist, employers may consider examining how transparent recruitment routes are; understanding how the potential applicant pool in the specific industry compares with the organisation’s applicants, and considering ways to widen an organisation’s potential applicant pool (such as implementing flexible working arrangements). Employers could also request that recruitment agencies provide them with long-lists (rather than shortlists), containing a number of female applicants (whilst considering the potential implications of positive discrimination).

(4) Do men and women leave your organisation at different rates? Employers are advised to determine the proportion of men and women leaving the organisation each year, by seniority level. If there is a gender imbalance in the proportion of men and women leaving at a certain seniority level, employers may use surveys to identify differences in engagement, aspirations to progress or feelings of belonging, and check whether structural issues, influencing employee’s perceptions of how successful they can be (e.g., if flexible working arrangements are not offered for senior roles) are affecting retention rates.

(5)Do particular aspects of pay (such as starting salaries and bonuses) differ by gender? This section suggests that employers assess the starting salaries by gender within comparable roles, and examine whether men and women doing comparable work receive different bonuses, pay for unsociable hours, or overtime. The guidance encourages employers to review the process for setting salaries, and other components of remuneration, to ensure they are transparent and fair.

(6) Do men and women receive different performance scores on average? Employers are advised to evaluate the way performance management scores are determined within the organisation, by breaking them down by grade and job. If there is a difference between the scores being achieved by men and women (broken down by grade and job), there could be a negative impact on the company’s GPG. Organisations are also encouraged to decide whether the self-assessment part of an evaluation process negatively impacts women over men (given research which suggests that women often rate themselves lower than men).

(7) Are you doing all that you can to support part-time employees to progress? Employers are encouraged to evaluate whether senior roles are accessible for part-time employees (which are more often taken by women). If a gender imbalance does exist, employers are encouraged to restructure senior positions to make them accessible to part-time workers (e.g., by introducing job shares, ensuring that part-time employees are offered the same training opportunities as their full-time counterparts).

(8) Are you supporting both men and women to take on caring responsibilities? The guidance emphasises the importance of supporting both men and women to take up caring responsibilities to achieve gender equality. Importantly, organisations may wish to consider the uptake of flexible working, shared parental leave and paternity leave, including by gender. If there is a low take-up of these policies by men, this suggests that men and women are likely to be working in different ways, which could contribute to a GPG. If discrepancies do exist between the caring responsibilities of men and women, employers may consider conducting surveys for their staff to identify whether employees are aware of available options; whether they feel supported in taking up flexible work; and whether they feel that current policies facilitate career progression. Employers may also consider raising awareness about shared parental leave, paternity leave and flexible working, enhancing pay for those on paternity leave and shared parental leave, or advertising all jobs as flexible by default. Managers may also consider straightforward conversations with male and female employees to ask whether they require any flexible working arrangement in order facilitate their caring responsibilities (specifically following a period of family leave).

Four Steps to Developing a Gender Pay Gap Action Plan

(1) Analyse your data and identify actions: This focuses on the root causes of an organisation’s gender pay gap, and suggests that every stage within the employee life cycle should be considered to identify any barriers, to ensure that adopted actions can be individually targeted to produce effective results.

(2) Consult and engage: HR directors are encouraged to assist senior employees (as wide-ranging as possible) in their understanding of proposed gender pay gap action plans in order to gain their full support. It may be useful to highlight case studies from other organisations within the same and different industries and sectors.

(3) Revise, assess, and embed your action plan: In order to ensure that an action plan is integrated into the everyday running of the business, the guidance encourages organisations to monitor, report, and evaluate the action plan to drive improvement. Setting specific dates and targets, and appointing a named individual (e.g., a diversity officer) to drive the plan forward may help ensure that the plan is developed appropriately.

(4) Allow enough time: The guidance emphasises that the development of an effective action plan is an ongoing process, and is likely to involve ongoing adjustments, which may take a substantial amount of time.

Conclusion

In publishing the GEO practical guidance, the UK government shows its commitment to understanding the root causes of any GPG, as there are annual reporting obligations. These are general practical guidelines, but in practice, the way in which employers can make a practical difference will depend upon the industry in which they operate, and often the culture of the company itself.

In certain sectors, companies may consider implementing specific initiatives to encourage women to return to work after periods of leave, (which may include a mentoring programme), to assist with potential cultural challenges. It is advisable for employers to consider the proportion of male and females from the recruitment stage until the termination of employment (including each level of seniority), as an imbalance is likely to impact the GPG. Crucially, companies should seek to fully understand the root causes of any GPG, in order to have the ability to make an action plan and tackle any such GPG.

Contacts

If you have any questions or would like more information on the guidance discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

London
Lee Harding
Sarah Stock