UK companies on board with gender pay gap reporting legislation

04 December 2017 6 min. read

New gender-pay-reporting legislation has come into force in the UK, requiring companies with more than 250 employees to annually release statutory calculations showing how large the pay gap is between their male and female employees. Companies affected by the legislation are in agreement about the principle behind it, with most taking the initial steps to become compliant, while Big Four professional service firms Deloitte, EY and PwC have already voluntarily released their data.

Gender diversity has been on the radar for corporates in recent years, with various studies noting that, outside of the ethical case, a business case can also be made for improving the number of women throughout the pipeline. Women face a range of barriers however, with most of their representation tending to be in low-paid roles, while pay was found to be on average £6,100 per year lower by gendered salaries across the board. Women in the financial services sector noted the highest disparity in their pay.

The UK Government, in a bid to improve transparency and to push businesses to enact positive change, has implemented a new policy that requires businesses with more than 250 employees to publish discrepancies in pay between women and men within their ranks. In a new report from HR consultancy Mercer, titled ‘UK Gender Pay Gap’, the consultancy firm asks FSTE100 businesses to indicate their opinions about gender pay reporting. The study involved 165 organisations, 29% of whom are in the FSTE250.

In general, businesses agree with the principle of gender pay reporting, with 16% saying that they strongly agree, down 7% on 2016, and 58% saying that they agree, up 7% on 2016. Few of the organisations disagree or strongly disagree with the principle, at 7% and 2% respectively.

Current level of legislation related activity

The jury is out as to whether the legislation will make a difference, with 48% stating that they believe it will, 25% of respondents unsure, and the remainder (27%) think it will make little difference. Organisations surveyed report that while many concerns from earlier drafts were allayed in the final legislation, some concerns have remained.

While the legislation came into force in April this year, the majority of organisations (68%) have thus far only performed a ‘dry run’ of the numbers, while 30% have run a formal April 2017 snapshot. Most of the organisations have taken the time to review the legislation in detail, while 58% report having analysed pay be level, while 56% said that they have prepared the data for formal analysis. One area that has seen little activity is broadcasting and dissemination of key message building for employees and the executing the narrative around pay level reporting.

The discrepancies in pay, found on initial analysis of formal snapshots, appear to be relatively stark. On average, there was a pay gap of 20.5% in the firm’s sample, slightly above the 18.1% is the UK average gender pay gap noted by the ONS in 2016. Finance, high tech/scientific and education, were noted as bearing the highest difference, at 30%, 25% and 18% respectively.Meeting the new legislation intentions

The intention to get onto the formal April 2017 snapshot is abundant at 61%, while most organisations are also intent on identifying a director to sign off on the request paperwork. Intentions around key message building and the execution of the narrative around pay gap reporting are relatively strong too, at 50% and 69% respectively.

Most of the surveyed organisations have set a timeline for the release of information pertaining to the pay gap at their organisation – with 44% planning to do so between October and January, while 19% plan to have completed the release by late February 2018. 28% report the release date as unknown.

Activity increase to improve gender outcomes

According to the study, the effect of the legislation is already seen to be pushing organisations to redress short-term and long-term drivers of a gap in pay. 48% of organisations have, or intend to, undertake the promotion of family friendly policies and part-time work options. 73% of organisations plan to develop the public narrative, while 66% say that they have, or intend to, conduct an equal pay audit.

A large number of organisations are also exploring the deep-seated causes of the gap in pay in the UK, including female progression, career and occupational segregation and implicit biases, among others. A variety of causes for a lack of progression for women has been noted in recent years.While of the following are concerns?In terms of concerns related to the new legislation, current staff perception is noted as bearing the most concern in terms of primary, secondary and tertiary indication by respondents. The risk of a damaged reputation, meanwhile, was noted as the primary concern. League tables is another area worrying firms, as well as the attraction of future talent. 5% said that they have none or few concerns with the new legislation.

“Those companies who focus solely on compliance will have a hard time closing the gap,” said Chris Charman, Principal and Reward expert at Mercer. “From our own research we see that to make progress on closing the Gender Pay Gap requires fair pay programmes, equal pay monitoring and corrective action, a strong focus on female progression and gender parity, as well as attention to the broader diversity and inclusion programme.”

In the UK consulting industry, three of the world’s four largest professional services firms have published their gender and ethnicity pay gap information in advance of the UK government’s April 2018 deadline, each standing at below 20%. EY, which most recently published its data, has joined Big Four competitors Deloitte and PwC, leaving KPMG as the only member of the gang of four who has not published its data on its pay-gap. However, the consultancy has announced that it is due to do so in December.