So there they are, the draft Regulations proposed to implement gender pay gap reporting.
No doubt there will be a storm of flak from all directions over these, from employers because compliance requires a considerable amount of work and from unions and employees because the Regulations have no legal teeth – there is no penalty proposed for a failure to publish the pay information required.
But actually there is a bigger credibility issue with these Regulations, one which affects both sides of the debate but for different reasons. While the exercise will undoubtedly achieve its principal and very worthy objective of forcing pay gaps onto the senior management agenda, it is of limited value otherwise, and may in fact do more harm than good. On the basis that the information is to be published per quartile in (initially) companies of at least 250 employees, each quartile will contain at least 65 people and (other than in the very flattest of organisations) a reasonably wide range of responsibilities and seniorities. The short point is that the information which is required to be published will not be specific enough for the most part to enable anyone to work out whether any published pay gap is the product of unlawful discrimination or not.
We can assume for these purposes that the average company with over 250 employees will produce statistics which show discrepancies between the earnings of men and women in one or more quartiles. From the purely legal perspective, so what? There are numerous possible reasons for this, none of which need have anything to do with unlawful discrimination by that employer. To take just two examples – “pay” for these purposes includes both maternity and sick pay. Both are of course very likely to be lower than normal earnings. Maternity pay is obviously an exclusively female preserve and Office of National Statistics reports also show that sickness levels for men in the UK are only around 60% of those for women. The inclusion of maternity pay and sick pay will therefore inevitably push down the female average even if both sets of employees have exactly the same salaries. In any quartile also it may be a regrettable but reasonable assumption that men will hold more of the more senior roles, and so be paid more, even if men and women doing the same job within that quartile are paid equally.
Nonetheless, there it will be – a published gender pay gap. The real concern for employers should be what may happen next. Much as with the Modern Slavery Act, these Regulations could be said to represent an abdication by the Government of its responsibility to produce effective and enforceable law. Instead, they hand over the rights and wrongs of the matter to be judged in the Court of Public Opinion, however well- or ill-informed that opinion may be. That Court will inevitably say that an employer with a pay gap of any size must be a discriminator – guilty until proven innocent. But the employer cannot prove itself innocent quite so easily. It is entitled under the draft Regulations to publish an accompanying commentary to the statistics, but most of the jurors in the Court of Public Opinion are unlikely to read, understand and/or believe the often complex and lengthy legal justifications which might have to be set out there to explain the absence of unlawful discrimination. Alternatively, the employer could successfully and publicly defend an equal pay claim, but that would be at enormous cost and distraction and would not prove that it had not discriminated in pay levels for other people or other categories of people within the organisation.
As a result, it seems likely that employers will have to get used to being accused of unlawful pay discrimination of which they are not necessarily guilty. This is nothing new at an individual level, but it takes on a different significance where the accusers are also now public interest bodies, prospective investors or job applicants, trade unions, activists, journalists or Governmental or private industry procurement functions. Ultimately I suspect that the fun to be gained by highlighting an employer’s gender pay gap will wear off, but in the meantime no gap will be too small and no progress towards closing it will be fast enough to please those who are looking for sticks with which to beat big employers.
Would it be better not to publish anything at all, given the absence of any sanction for taking that approach? At one level, yes – the employer could simply maintain a dignified and stonewalling line that its pay rates were its own business and that of its employees, and that it was therefore not prepared to provide any explanation or comment on them. While deeply irritating to the Government and others who might be interested, it would not be an admission of anything and would certainly be much less vulnerable to being picked over than any sort of accompanying commentary on why a gap existed. However, the likelihood must be that if a lot of employers choose not to publish a gender pay gap statement, the Government will shortly introduce penal sanctions to compel them to do so. I suspect that it is also the sort of stance which could contribute to adverse inferences being drawn in Tribunal proceedings.
It was the first Duke of Wellington who told his would-be blackmailers that they should “Publish and be damned”, but the trouble with relying on the opinion of the general public as an indicator of what is legally acceptable is that you will probably be damned whether you do so or not.