What can the second year of gender pay gap data tell us?

It’s that time of year again. Companies employing more than 250 people should by now have submitted their mean and median gender pay gap statistics for the second year or will be facing a penalty.

Early analysis of the figures shows that the overall gender pay gap has grown since last year, with 45% of companies reporting an increased gap. In total, 78% of companies reported a pay gap in favour of men. The construction and finance sectors showed the largest disparities, and companies such as EasyJet and Barclays Bank reported that male employees earned nearly 50% more than women.

The BBC reported that more than nine out of ten British universities pay their male employees more than their female employees. Government departments are not immune to the legislation either, nor are their records spotless; all but one department reported a pay gap. In fact, one in three Government departments report wider pay gaps than last year.

So why have we seen an apparent increase in the pay gap? One reason might be that reporting this year has been more accurate than last year, when it was reported that many companies struggled with their figures, producing reports that were ‘statistically improbable’. It remains to be seen whether this year’s figures have actually been more accurate, but the increased pay gap this year could be a symptom of better reporting. Although, some businesses have already been criticised this year for their reporting methods; in one case a law firm was criticised – perhaps unfairly – by the BEIS select committee for omitting equity partners’ earnings from their dataset, something partnerships had not been required to do. It seems that the Government still needs to find a better way of ensuring consistency in reporting methods going forward.

The increased pay gap might also be explained by changing recruitment policies. Some companies have suggested that this year’s figures have been skewed by the fact that they have been hiring more women in entry-level roles in order to lessen the gap in the long-term. Counterintuitively, the short-term impact of this approach is that the pay gap grows, because having more women in lower paid roles brings down the average for female employees. In such cases, employers might seek to limit the bad publicity that comes from an increased pay gap by including a narrative in their report explaining what their long-term strategy is, in order to give some context to the statistics.

Optimists will hope that greater gaps this year are a symptom of companies beginning to take the gender pay reporting more seriously, whether evidenced through more accurate reporting or changing recruitment policies. However, regardless of the reason, businesses should be mindful of the story that the annual publication of these statistics is telling us, and, in particular, what it tells their female employees, prospective employees and stakeholders.

David Greenhalgh

David Greenhalgh

Partner – Employment

+44 (0) 20 7580 5721

david@joelsonlaw.com

This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.