Focus on…gender pay parity

Britain’s gender pay gap has refused to close for years. At 9.4% in 2016, the difference between average pay for male and female full-time employees was little changed from the 10.5% gap five years earlier.

British women still earn significantly less than men and one analysis by Deloitte estimated that at this pace the pay gap will not be eradicated until 2069 – or 99 years after the Equal Pay Act.

To try and tackle this problem, successive governments have pledged measures to drive out inequality. David Cameron, in particular, pledged to drive down the gender pay gap within a generation. But it looks like it was largely just talk.

Gender pay reporting was introduced in April of this year so that companies with more than 250 employees are now required by law to collect data so they can publish their gender pay gap, gender bonus gap and a breakdown of how many women and men get a bonus.

They must also reveal the proportion of men and women in each of four pay segments, or quartiles, from lowest to highest pay. But there are no rules about what companies should do once they uncover pay gaps and consequently the rules are little more than a subtle process of naming and shaming employers.

Very few employers are adopting the ambitious approach adopted by London marketing start-up Brainlabs which, after it found an 8.6% pay gap, raised female employees’ pay by an average of 8.6%. However, the backlash experienced by the BBC in July when it published wages for its high earners might cause companies to be more proactive in managing the pay gap.

Nevertheless, the data is not clear. The data is not suggesting, when comparing men and women across the UK doing similar jobs, that men earn more than 9.4% more than women. The problem is not consequently typically pure equal pay and discrimination (although that does remain a factor), it is more a structural social issue. There appears to be a gravitation amongst women, by choice or social circumstances, towards less well paid work.

One major factor often flagged for women’s lower earnings is the time taken out to have children and the nature of work they then return to – the so-called motherhood pay penalty. The Office for National Statistics notes the gender gap is relatively small up to age 39 for full-time employees. From 40 upwards, the gap is much wider. So it goes from just 1.5% for 30-39 year-olds to 13.4% for the 40-49 age bracket and 16.2% for the 50-59 bracket.

The introduction of shared parental leave was designed to address this structural problem and to encourage more men to take on child care responsibilities. It seems to have failed. When the legislation was introduced, the Government estimated that between 2% and 8% of men would utilise their new rights. The take-up by men is to be formally assessed in 2018, but it is estimated to be less than 1% currently.

The reason for this poor take-up is suggested to be in part that men consider that taking shared parental leave will be perceived negatively. But undoubtedly pay is a massive feature. Men are typically the family breadwinners so there is a vicious circle: men are the family breadwinners so they do not take time off work so women continue to experience the motherhood pay penalty.

This vicious circle is compounded by the fact that when men take shared parental leave, they are paid the equivalent of statutory maternity pay. Women on the other hand are paid statutory maternity pay as a minimum but they may enjoy enhanced maternity pay which often is substantially more generous than statutory maternity pay.

This disparity in terms of maternity pay was considered by an Employment Tribunal in July 2017 and it was determined that a man should enjoy the same enhanced maternity pay which his employer would provide to a woman.

This decision is only an Employment Tribunal decision and consequently is not binding on other Courts and Tribunals. Also this decision goes in a different direction to an earlier decision of a different Employment Tribunal.

But it is an interesting development, in that this direction of travel might significantly improve the pay gap, but also that employers with enhanced maternity pay schemes may have to make similar payments to men taking shared parental leave.

How can I find out more?

For further information on the issues raised by this update, please get in touch with Joe Thornhill or a member of the employment team.