Gender pay gap reporting – blunt instrument or transparency tool?

Gender Pay Gap

Gender pay gap reporting – blunt instrument or transparency tool?

“It is a shame that we are so half-hearted about some of the laws we’ve got. Equal Pay – where is it? It’s the law, it should be in place, what’s the problem? Yes, it’s going to cost a lot of employers a lot of money because they are not paying equally! So?!” Rosemary Martin, General Counsel, Vodafone.

As the deadline for gender pay gap reporting approaches every year, Rosemary Martin’s comments from a First 100 Years 1 event hosted in September 2015 always spring to my mind, with sadness. She was of course referencing equal pay (i.e. paying women and men the same for the same job) as opposed to the pay gap (a measure showing the difference in average earnings between women and men) but both these concepts were introduced by legislation against gender inequality to address women’s work being devalued by organisations. I am sad that both remain enforced equally shyly since coming into force 46 years and 4 years ago, respectively. My heart sinks every time we approach the filing deadline in April each year as I know just how the widening of the gender pay gap will be explained away and criticised as an insufficiently nuanced tool, a “blunt” instrument incapable of painting an accurate picture of organisations pay structures. And yet, since it has been introduced, women have been able to rely on the public data to demand transparency around their pay and be compensated for being underpaid.

Lady Hale, who is our patron, told me a story a while back: “I’ll never forget the day when a bright woman student of mine at Manchester University told me that she had been offered a job with an insurance company (she didn’t want to go into legal practice) but that the pay would be two thirds of what a man would get for doing exactly the same job. The Equal Pay Act 1970 made that impossible. Whatever the good that it did not do, we should always remember the good that it did do.” I too remember being offered a job and taking a call from my future boss informing me that they would pay me £6,000 less than the advertised salary for the role. On the day I arrived at work, I realised I was the only woman at that pay grade. Too many women continue to have stories like these – they should by now be historical anecdotes of how pay for work used to be for women not how it is today.

When the Chancellor Rishi Sunak announced his economic emergency rescue package on 24 March 2020, he also announced that compulsory gender pay reporting 2 would be suspended for the year. It would have been just the 3rd year of data under the legislation. It was a move that hardly made any waves at the time, as the UK was placed under lockdown. And yet we were only a matter of days from the filing deadline of 31 March (for listed companies) and 5 April (for private companies) respectively. Most companies should have been ready to file. Those that did file, showed an increase gap of pay and bonuses with the situation clearly getting worse, not better. By taking this seemingly small step to alleviate the pressure on businesses, the Chancellor had unwittingly given them the green light to put the gender pay gap to the bottom of the pile. In February 2021, the Equality and Human rights Commission (EHRC) followed the Chancellor’s announcement with a further delay of 6 months to compulsory reporting – “due to the continued effects of the COVID-19 pandemic” – and moved the filing deadline to 5 October 2021.

Figures published in October 2021 paint a dire picture at law firms and showed a rise in the gender pay gap at big city law firms in the year that women were marking 100 years of being finally allowed to join the legal profession. Most of the magic firms hover around the 40% gender pay gap whilst some of the US-HQ-ed law firms big enough to need to file, report a much higher pay gap, e.g. 61% at Sidley Austin LLP.

Like in previous years, we saw law firms blame male heavy senior teams for skewing the pay gap figures, but there really are no excuses. Firms need to review their pay structures and ensure that everyone at the same level is paid the same. It is not good enough to say that a new recruit was paid less in her last role so should start at a lower salary than male colleagues. Firms must pay people equally if they have equal value to the business.

Gender pay gap reporting is vital in the fight for equality. A lack of pay transparency is one of the main barriers to women’s progress in the law and although early on in a private practice career pay grades are very clear, it is at senior levels where there is less transparency and the pay gap widens.

Reporting gives visibility to the problem. Now we have the knowledge, action needs to follow. I would like to see the results of pay gap reporting drive client buying decisions – that is how we will see real change. Whilst senior in-house lawyers have publicly stated they will insist on diversity from the law firms they instruct, on gender pay gaps many find themselves in companies that also face this problem. This means they are less likely to put their heads above the parapet to demand change from their suppliers.

The publicity generated by reporting also raises awareness amongst women of what their rights are and how their own firm performs. Women at poorly performing firms need to speak out and demand equal pay when they know they are being paid less than men – it is after all against the law. Long term firms need to wake up to the fact that ensuring equal pay means retaining talented women who, if they see they are being undervalued, will begin to look elsewhere. ■

Dana Denis-Smith

Dana Denis-Smith

Founder of Next 100 Years and CEO, Obelisk Support

1. First 100 Years, https://www.youtube.com/watch?v=cxPHnRUCIpA

2. The deadline for law firms with 250 or more employees to reveal their gender pay gap under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 is 31 March (public companies) and 4 April (private companies).