Why companies need to act NOW to protect their reputation with the Equal Equality Act 2010 (Gender Pay Gap Information) Regulations 2016
I’m always interested to read international news about the gender pay gap, and in particular what this country can learn from businesses around the world.
It was therefore very interesting to read how, according to Australia’s Workplace Gender Equality Agency, men continue to earn 23% more than women on average.
The data covered more than 12,000 employers and four million employees, representing about 40% of employees in Australia.
In addition, the report also showed that women earn 77% of men’s average full-time income. Industries with the largest gender pay gap were financial and insurance services (33.5%), real estate (29.3%) and construction (28%).
Are you shocked or surprised to read this?
Frankly speaking, I was disappointed to read about it, yes.
But am I surprised or shocked? Unfortunately, no.
Unfortunately, the pay gap is a global issue, one maybe even experienced by some senior, female business professionals at one point or other.
And you can guess how we feel. And it’s not a positive response!
Defining a company’s reputation
So if we now turn to the UK’s Equality Act 2010 (Gender Pay Gap Information) Regulations 2016) which is likely to come into force in April 2017, in much the same way as I and others may have responded to the findings in the Australian report, UK companies should be aware of the Regulations’ impact on their reputation.
As most companies understand by now, only private and voluntary sector employers in England, Wales and Scotland with at least 250 employees will be required to annually publish their gender pay gap figures.
Whether these businesses choose to embark upon a full audit of their pay arrangements, the most important thing is that they are prepared and understand they must comply.
The government has even stated that it will run checks for non-compliance. What’s more, they could even “name and shame” non-compliant companies.
This being the case, employers who remove gender bias from their pay systems could avoid potentially damaging and costly legal action. And this includes the reputational damage to a company and its brand with its staff, customers and stakeholders.
Currently, both basic pay and bonuses need to be accounted.
“Pay” will include basic pay, paid leave, maternity pay, sick pay, allowances, shift pay, bonuses and other pay including car allowances paid through payroll.
Yet from my understanding this won’t include overtime, expenses, the worth of salary sacrifice schemes and any benefits in kind or redundancy pay.
Therefore it’s important that employers understand that as well as the risk of equal pay claims, the reputation of a company could also be called into question. In turn this could affect a company’s ability to retain and recruit staff.
Although the draft Regulations may be subject to some change, enough is known to give employers the chance to implement a strategy to address any gender pay gap issues now.
So with this in mind, I think companies need take a short term and long-term approach as follows:-
- Work with HR and finance departments for information regarding salaries and bonuses.
- Made senior managers aware of the legislation and their personal responsibility, as they approve and sign the report.
- Address any gender pay gaps and where they arise.
- Publish and disseminate their report.
- Review issues causing gender pay gaps, and implement change as appropriate.
- Commit to ensuring that all staff can access management and leadership training.
- Review the ‘return to work’ scheme to encourage more new mothers to return to work.
- Evaluate organisational staff hierarchy and infrastructure to ensure that positions aren’t gender-biased.
Commercial Impact of Gender Pay Gap
As such it’s now vital for companies to understand the need for transparency in the gender pay gap. The initial rumble has now moved to a roar. And that roar is set to get louder, I promise.
As I have explained, as negative publicity resulting from gender pay gap reporting may have a significant impact on a company’s reputation, companies have the opportunity to recognise, investigate and improve gender pay gaps NOW.
In summary, failure to do so poses just too great a legal, reputational and consequently commercial, risk.
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