Gender pay gap reporting FAQs

Most financial services institutions recognise that their gender pay gap data will reflect some inconvenient and uncomfortable truths about the gender dynamics within their organisation. Only around 13% of approved individuals in trading firms are currently women, with 16% in investment management and just over 18% in retail banking.
 

This disparity between the sexes is having a knock-on effect on firms’ gender pay gap data with some financial services employers having reported an average pay gap of around 50% for wages and significant discrepancies in respect of bonuses. Other companies are reporting equally bad, if not worse, figures.

It has become clear in recent days and weeks, with the publication of firms’ gender pay gap data, that we are at something of a crossroads. Gender pay gap reporting, in and of itself, will not bring about the wider cultural and societal shift needed in order to remedy pay disparity between the sexes completely. However, it has shone a harsh spotlight on those firms with poor internal practices, and the public scrutiny of these businesses could be a catalyst for real change.

Understanding what your employer’s gender pay gap data means for you has never been more important.

1. IS THE GENDER PAY GAP THE SAME THING AS UNEQUAL PAY?

No. Unequal pay is when two employees are doing the same job, or similar jobs, or work of “equal value” within an organisation, but are paid different amounts for doing so. Unless an employer can show that the reason for this is due to a genuine, material factor which is not related to the sex of the employees in question, then paying them different amounts will be a breach of equality legislation.

The gender pay gap is another matter. It refers to the difference in pay between men and women within an organisation, irrespective of their jobs.

2. My employer is reporting a gender pay gap – is this illegal?

No. Companies can pay individuals who are doing the same job, or similar jobs, or work of “equal value” the same amount, and still report a gender pay gap.

If there are more men than women employed in senior roles within a business (and therefore more men than women attracting higher wages and bonuses, for example), then a business may report a gender pay gap in favour of men.

However, this does not necessarily mean that female employees within the organisation are paid unequally, as compared to their direct male peers.

In order to make sense of your employer’s gender pay gap report, it is important to appreciate the nuances of the data contained within it.

3. So, what does my employer’s gender pay gap report tell me?

Your employer’s gender pay gap report will not tell you if you are being paid un/equally for doing the same (or a similar) job as your colleagues. However, it may enable you to make a basic assessment as to whether or not you might be. It may help you spot patterns which could or ought to be challenged.

For example, if there are a significant number of women in the lower quartiles of your employer’s gender pay gap data, but far fewer in the upper quartiles (i.e. in the more senior parts of the business), you may want to ask why that is the case . Why is it that a smaller proportion of women are being represented at management level, when there are so many at the junior end? Is this because women are simply not applying for more senior roles within the business or do not have the requisite skill set to move through the ranks, or is it because their career progression is stalling for some other reason?

Alternatively, if your employer’s data shows that it has more women in each quartile of its pay structure, and yet 80% of men within the business received a bonus as compared to only 40% of women for example, again, you may want to ask why. After all, if women are “overrepresented” as compared with men, the bonus figures might be expected fall in their favour.

It may be that your employer’s data indicates that your company has got the pay balance about right as between the sexes. Alternatively, it may indicate that there is an equal pay or sex discrimination issue which warrants further investigation.

4. I am a woman and am concerned to see that, according to my employer’s gender pay gap report, the men in my company are typically paid more than the women. What should I do about this?

Currently, the gender pay gap in the UK across full-time and part-time employees is 18.4%. There are a variety of reasons why this is the case. Some of the main contributing factors are:

• a larger number of men operate at senior or management level, as compared to women;
• women are more likely than men to take longer (or more) career breaks to manage caring responsibilities (for example, upon having children);
• women are more likely than men to work part-time or flexibly;
• men are statistically more likely than women to ask for, and therefore receive, a bonus or promotion (meaning that their remuneration is likely to be higher).

If you are concerned that your employer’s data suggests it is paying one gender more than the other, you may want to:

• read any accompanying statement or narrative which your employer has provided to explain their gender pay gap. Many employers are setting out a business plan in such statements/narratives, identifying how they intend to close their gender pay gap. For example, some businesses have pledged to recruit equal numbers of men and women going forward, manage women in the workplace better, appoint appropriate senior role models, improve their equal opportunities policies and procedures particularly around recruitment, bonus and promotion, encourage the take up of shared parental leave, and/or offer enhanced/additional paternity leave etc. You may want to make sure your employer lives up to any business plan or pledges in this respect. If it does not do so, you may have a claim for breach of trust and confidence and/or potentially discrimination on grounds of sex (depending upon the circumstances);
• ask questions of your senior managers and/or HR. For example, why has your employer reported a gender pay gap? Is it because women are underrepresented at senior or board level? Is it because women are not being properly supported in the workplace once they return from a period of extended leave (such as maternity leave)? Is it because women are being passed over for promotion?; and
• compare your employer’s gender pay gap report with those of industry competitors. Your employer’s data may indicate trends which suggest that women are being deprived of career progression opportunities. If, for example, you can see that 70% of men within your company work in management, as compared to only 30% of women, you may want to consider your own career trajectory critically. What are your promotion prospects going to be? Should you be looking for a bonus, pay rise or promotion? How you broach such matters with your employer will need to be considered very carefully. You may want to use the current media focus on these issues to support any proposal you may have in this respect. Alternatively, think about whether your employer’s competitors are producing better data, indicating that they have the balance between the sexes right. If your company’s data is falling short of the mark, as compared to the data which peers are publishing, is it a company you really want to work for?”

5. I can see from my employer’s gender pay gap data that a significant proportion of my colleagues (male and/or female) received a bonus last year. I did not. What should I do?

Depending upon the circumstances, you may want to ask your line manager or HR why you did not receive a bonus last year, when some of your peers did.

There may be genuine reasons for this (for example, if your performance was not up to scratch, or if your area of the business did not meet bonus targets or satisfy performance matrices, or if you were not eligible for a bonus because you joined (or left) your employer partway through the financial year).

If, having raised your concerns, you do not believe there were fair reasons to deprive you of a bonus, you may want to consider submitting a grievance in accordance with your employer’s Grievance Policy and exploring the matter further. You could begin the process with an “informal” grievance, before it is escalated to the “formal” stage (if necessary).

6. There are a number of partners in my firm. However, I cannot see any reference to partner pay in my firm’s gender pay gap report. Why is this?

Partnerships are not currently under a legal obligation to include partner statistics within their gender pay gap data. This is because partners’ remuneration is calculated differently to employees’ pay, so is considered not directly comparable. For example, partners take a share of their firm’s profits (known as “drawings”). The share is sometimes determined in whole or in part in accordance with a “lock step” mechanism commonly based upon longevity in the partnership. Employees, on the other hand, receive a regular, fixed, salary which is typically paid on a monthly basis.

There have been calls from a number of commentators and MPs for partner statistics to be included in firms’ gender pay gap reports. On the face of it, it seems counterintuitive that a group within society which is generally very highly remunerated and very male dominated is not included within the data, given that the whole purpose of that data is to promote transparency of pay and equality between the sexes.

Following adverse publicity in this respect, some law and accountancy firms (all of the Big Four accountancy firms in the UK, for example) have recalculated their gender pay gaps and are self-reporting partner data. It may be that the regulations are amended in due course, to require firms to report partner data either alongside, or separately from, employee data.

In the meantime, whatever the legal requirements, it looks like we may see more firms self-reporting. Arguably, firms will want to be seen to be in the vanguard of this process, rather than producing statistics only when forced to do so.