#Purplewashing the Gender Pay Gap

#Purplewashing the Gender Pay Gap

Welcome to my LinkedIn newsletter! In each issue,?I will be sharing Employment Law insights on important topics with my connections and followers. A special thanks to @MirandaRobertson for helping me with this week's article

The requirement for businesses with a headcount of more than 250 to publish their Gender Pay Gap came into force in 2017.

The Gender Pay Gap is the difference between the average (mean or median) earnings of men and women across a workforce on its ‘snapshot date’ - 31 March for most public authorities or 4 April for private or voluntary organisations.

Since 2017, there has been a flurry of Gender Pay Gap articles (mine included). Attention commences in March with International Women’s Day, often focusing on Gender Pay Gaps and Inequality in women’s pay.

Gender Pay Gap reporting was seen as a significant step at the time and was lauded as ensuring this would be a hot topic for discussion each April. However, in terms of informing meaningful change in workplace equality, can we say that Gender Pay Gap reporting has done much. Have we moved from words to actions? ?

Gender Pay Gap vs Equal Pay

But first, let’s clarify some terms from the outset. Many people use the phases ‘Gender Pay Gap’ and ‘Equal Pay’ interchangeably, which is incorrect.

The Gender Pay Gap is the % difference in average pay between men and women across an organisation. There is no legal requirement to lower the gap. On the other hand, equal pay is a legal obligation to give men and women equal pay if they are employed to do the same work, like work or work of equal value. This is usually assessed with reference to a male peer (a ‘comparator’) who does the same job as you.

The Gender Pay Gap is the % difference between average hourly earnings for all men and women in a company.

‘PurpleWashing’

Since Gender Pay Gap reporting was introduced in the UK in 2017, incremental changes have reduced the pay gap to 15.4% (Source: Office for National Statistics).

For years we have been told we are heading in the right direction and narrowing the gap. If you look at some of the company reports, they are improving on the face of it. However, the issue with Gender Pay Gap reporting is the lack of any enforceability. The Equality and Human Rights Commission (EHRC) have announced they will begin enforcement against companies who have not complied with their obligations to meet the reporting deadline but that is where it stops.

There is simply nothing to hold companies accountable for their gender (in)equality statistics year in and year out.

Each year, businesses will post Gender Pay Gap reports outlining equality values and roadmaps for the year ahead. They will often ‘excuse’ themselves, referencing external factors, such as Covid, furlough, and women predominantly working part-time in lower-earning roles.?

Or they will point to more favourable PR activities to distract from poor Gender Pay stats such as early voluntary adoption of ethnicity pay gap reporting or the number of women in the boardroom. Don’t get me wrong this is important and part of the change we need to see but it is far from the whole picture or indeed the point of ‘across all levels’ Gender Pay Gap reporting.

Gender Pay Gap reporting isn’t about numbers and titles, it’s about pay.

Although increasing representation on management boards is a positive action, it is not a useful metric for measuring gender equality. In the US, women in the C-Suite of the S&P 500 earned 75% of what their male counterparts made in 2020 – the widest pay gap since 2012. We are getting in the door but selling ourselves short by accepting a huge financial discount.

Did you know purple is the colour of International Women’s Day celebrations?

Apart from this whitewashing, or ‘purplewashing’ of actual pay disparities between women and men in the workforce, Gender Pay Gap statistics give no meaningful insights into the inequalities that exist in different roles within an organisation. The truth is we are no clearer to knowing what is going on in most companies and we are relying on them to tell us, with no means to objectively verify the information they give us.

So what do we do about this?

Promoting pay transparency and focusing on equal pay are better measures to generate meaningful information and discussions on pay discrepancies. This will give the woman in your companies something tangible to work with - information on where the organisation falls short and where to start making changes.

If employers can’t, or won’t, adopt these practices then we must question if they are genuine about redressing the imbalance of pay.

Pay Transparency

Focus should turn to equal pay statistics. Equal pay refers to how much a woman is paid compared to a man in the same, similar or equal value role.

However, to gain access to equal pay information, we must first increase pay transparency.

Pay transparency is still relatively rare in the private sector. For many years, it was standard for employment contracts to include a clause preventing informal conversation about salaries.

Now, section 77 of the Equality Act 2010 renders pay secrecy clauses in employment contracts unenforceable in certain circumstances. Those ‘circumstances’ are to determine whether there is a connection between any difference in pay and a protected characteristic (gender).

This is a first step, but many employers continue to discourage the conversation and clamp down on such requests when made, claiming they are protecting the ‘confidentiality’ of the other (male) employees.

Putting salary front and centre of the interview process will help remove the ‘taboo’ around salary discussions.

Minister for Women, @BaronessStedman-Scott, launched a pilot initiative on 8 March 2022 to level up employment opportunities for women. The initiative involves listing a salary range on a job advert and not asking applicants to disclose salary history with the aim of improving pay transparency in the job application process. A welcome move.

Pay Reviews, Requests and Negotiations

A survey of 16,000 people carried out by YouGov found that just 1 in 5 (21 per cent) of women have successfully asked for a pay rise, compared to nearly 1 in 3 (31 per cent) of men.

More confidence asking for, and negotiating, pay and pay rises will help more women reach pay parity.

Agreeing to the request, will bring down your Gender Pay Gap %.

Women have historically not negotiated hard enough compared to their male counterparts. I have discussed this in previous years. I get some pushback on this, but it’s true. Women need to push the pay point, be assured that men do.

This failure to negotiate pay is at all stages of the employment relationship. The offer stage, at annual pay reviews, at the end of a significant and successful project, when promoted, and even when they feel they are worth more.?

I have advised many female clients over the years often with pay and pay rise negotiations. It’s generally the same advice.

Be confident, be prepared and be objective.

Set out your arguments, your skills, and your successes. Don’t be afraid to reference your male peers. Ask your boss to consider their pay levels and assess your contributions to the business compared to theirs and make an assessment of your respective pay. This is the litmus test.?

Reputation

Each year, the gender debate becomes more extensive, and violence against women and #metoo topics are shaping the way we think about women in society and the workplace.

Closing the Gender Pay Gap is moving too slowly and, according to many, has gone backwards in the last 2+ years. Equal Pay remains essentially a taboo subject in the workplace. Employers are dodging the subject at their peril. Several significant Equal Pay cases are going through the tribunal process. An outcome will be decided on at some point, and the conversation will become more real.

High profile and costly cases are already hitting the headlines. See Stacey Macken, who publicly shamed BNP Paribas with a ￡2m pay-out for gender discrimination.

Reputation matters

Many of you may have read about the Twitter bot that trolled companies on International Women’s Day. When an organisation posted gratitude for their female employees, the bot would respond with the company’s Gender Pay Gap results.?

Stats are just not going to cut it for much longer. Real movement will need to be seen and felt through organisations. There is a wave of sentiment rising, and a new generation of women climbing the ladder who have cut their teeth on activism and know how valuable the right PR , and how detrimental bad PR, is for organisations.

Investment

But looking at the positives. The benefits of increasing pay transparency and narrowing gender pay do not just extend to reputation but also investment opportunities. ESG has become a prominent theme in investing.

Gender equality statistics are attractive to investors, feeding nicely into the ‘S’ category.

An article in the Financial Times reported how investors are seeking information about equal pay across the business as part of their initial company research.?

Investors are savvy. They will not be duped by the team’s makeup or the board. They will delve deep. They will be looking at the PR as well as the legal risks of investing in a firm that gets sued for equal pay breaches or discrimination. Failure to provide this information or having shameful statistics risks losing valuable investment opportunities for start-ups.

So what should employers be doing?

To echo Noreen Farrell,

“It’s not enough to have our butts in the seats; we have to get the same cash in our pockets.”

It is no longer sufficient to focus on Gender Pay Reports and management board representation as a metric for achieving gender equality. What matters to employees, investors and consumers is the equal ￡/$ value that employers put on male and female components of their workforce.

Feel free to Get In Touch if you’d like some advice on your pay and benefits and how they could be improved.

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