Equal pay – update to March 2016 research report

Equal pay – still minding the gender pay gap?

UPDATE TO MARCH 2016 DISCUSSION PAPER Stephanie Bird

EQUAL PAY – STILL MINDING THE GENDER PAY GAP?

UPDATE TO MARCH 2016 DISCUSSION PAPER Introduction With immaculate timing, the draft regulations were published just after our PARC discussion paper had gone to press. So, with everything now sorted and clear, can we all move on to producing the unambiguous and self-explanatory data required, and skip over the concerns and issues raised in the report?

Unfortunately, no – I don’t think we can. If anything, I believe the draft regulations intensify those concerns. Significant ambiguities remain in getting to the ‘numbers’, the ‘numbers’ themselves remain a blunt weapon of dubious effectiveness, and the ‘league table’ approach (whilst attractive to politicians) has the potential to be a nightmare for even the best organisations to handle reputationally.

It is to be hoped that the significant resource needed on reporting and explaining (despite the Government’s Impact Assessment and under estimate on this) will not detract from the efforts needed to solve the long-term issues.

The draft regulations It is not the intention of this update to give the full detail of the draft regulations, which cover private and third sector organisations with 250 or more employees. These are available from many legal firms – including Fox Williams, who authored ‘The legal evolution’ in the full report. However, the main timeline issues are: Draft regulations published

12 February 2016

Consultation closes

11 March 2016

Regulations implemented

1 October 2016

First relevant date

30 April 2017

First reporting deadline

29 April 2018 (and every year thereafter)

At first glance, the reporting requirements seem relatively simple – a snapshot at 30 April each year of: 1. the % difference for male and female employees in mean hourly pay during the relevant pay period 2. the % difference for male and female employees in median hourly pay during the relevant pay period 3. the % difference in mean bonus pay of male and female employees in the 12 months to 30 April 4. the % of male and female employees who received bonus pay 5. the distribution of male and female employees in each pay quartile.

The data must be published on a UK website, in English, accessible to employees and the general public, and be available online for three years. It must also be uploaded to a government website, to allow the generation and publication of ‘league tables’ although we have scant details on this aspect.

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EQUAL PAY – STILL MINDING THE GENDER PAY GAP?

But issues remain Scope is still unclear – who are ‘relevant employees’? Neither ‘employees’, nor ‘contract of employment’ is defined. Under unfair dismissal regulations the scope is more narrowly constrained to employees than in the Equality Act 2010 – which covers contracts for services, thus including e.g. workers, LLP members and potentially some consultants. This chimes with the concerns expressed by Reward Directors in the original report, around both generating the data and the potential distortion of the ‘employee’ picture.

The definitions of pay and bonuses, and what is included and excluded in each, are unfortunately still ambiguous and potentially ripe for manipulation and confusion.

For example, the bonus calculations around options, deferred awards, and methods and timings of valuation, are not yet clear, and could make a material difference. Different periods for commission payments will also cause problems. The inclusion of so many elements into ‘pay’ will intensify the need for excellent narrative to make sense of what at first sight might appear gender based inequalities.

Conclusions All of these elements still resonate with the concerns expressed by PARC members in the original report. How do they provide accurate and meaningful data and analysis amongst a sea of ambiguity? How will their organisations create a truthful and informative narrative alongside the blunt weapons of simple figures and league tables which could damage organisational reputation? How do they really know that they are on a level playing field with their competitors? And how will they maintain focus and effort on the actions that will make a difference to the gender balance and talent pipeline of their organisations, whilst knowing that some actions will make their numbers worse in the short term and risks hampering these efforts?

We now know the outline requirements, and the timescales involved – even though 29 April 2018 seems a long way away, organisations need to understand now where they currently are – and where they need to get to by then. And for some issues, there could be benefit in generating and communicating common messages across particular sectors, to improve the understanding of the public and the media.

But the key question still remains – will the regulations make a difference? Will they do what David Cameron stated?

“End the gender pay gap in a generation. That’s my goal.” – David Cameron, July 2015 The jury will be out on that one, causal or correlation, for quite some time to come.

Stephanie Bird March 2016

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