The Government has published its long-anticipated draft regulations on gender pay gap reporting. The feedback has been mixed. Hannah Griffiths, MerchantCantos Sustainability Consultant, explains why reports need to be meaningful to their audiences and truly representative of the business.
Earlier this year the Government published its long-anticipated draft regulations on gender pay gap reporting – setting out disclosure details and timescales for what is an upcoming mandatory requirement.
By Hannah Griffiths, MerchantCantos Sustainability Consultant
The legislation aims to further enforce the Equal Pay Act of 1970, which stipulated equal pay for equal roles. 45 years since its launch, the Office for National Statistics estimates the current UK gender pay gap is still at 19.2%, a disappointing figure that is reinforcing growing calls for more action to redress the balance.
The new regulations come into force on October 1st 2016, but will not require immediate publication. A data snapshot is demanded after six months and a full, annual publication after 18 months.
In 2018 every organisation – both public and private – with over 250 employees in England, Wales and Scotland will be required to comply.
Standout stipulations include:
- Publication of overall gender pay gap figures, calculated using both the mean and the median - narrative and context will be voluntary
- Additional publication of the number of men and women working across salary quartiles
- Disclosure of employee salaries and bonuses, but not overtime
- Data must be publicly accessible and published on a searchable UK website
- Employers must also send compliance evidence to a government-sponsored website
- The Government aims to publish a league table of all eligible companies
- Penalties for failure to comply are still under review.
Feedback has been mixed
The regulations have received vocal feedback – both for and against. They have gained strong backing from employee support groups such as the TUC, but resistance from some – not all – business lobby groups, particularly around the idea of league tables.
Politically, although parties are united in the need to further align equal pay for equal roles, opinions differ on the timescales allowed for disclosure.
This was clear from Friday’s press coverage - some commentators supported the opportunity for organisations to get their house in order before public naming and shaming ensues; others, including Labour’s Dan Jarvis and the TUC’s Frances O’Grady, criticised the further delay and a missed opportunity to shine a light on current unlawful remuneration activities.
A handful of businesses have pre-empted legislation
A few organisations already report their gender pay gap publicly. Tesco and Friends Life were big name early-movers, but it’s PwC which takes the most granular approach to date. For the second year running, PwC has published national average comparable, total year-on-year percentages within the narrative of their Transparency Report. Taking a step towards more meaningful communication of this data, the firm also reports a lower, adjusted ratio that takes into account their male-heavy senior workforce.
Other businesses are taking action, even if they are not yet publicly communicating their data. Fortune reported on Wednesday February 10th, that the Swiss Bank UBS was taking steps to close the gap and to stem the number of women leaving the bank, with a review of diversity and remuneration within the business.
MerchantCantos has observed a growing focus on equality, inclusion and corporate culture in reporting - supported by a deeper granularity of disclosure. A key driver for this has been an explosion in related legislation and voluntary reporting frameworks, gender pay gap disclosure regulations being the most recent. Other key examples include the UK’s upcoming Modern Slavery Act and the Living Wage amendment to the National Minimum Wage Act, as well as the Global Reporting Institute’s 2013 G4 guidelines, which push for more transparent governance disclosure.
This evolving legislation and guidance aligns with a wider reporting movement that places emphasis on communication of the ‘how’ and the ‘so what’, as well as the approach or policy. The UN’s Guiding Principles Reporting Framework is a good example, calling on organisations to disclose the systems and processes that they deploy to tackle human rights, and the impact that these are making.
Moving forward, communication will play a vital role in addressing these growing requirements, both internally and externally. In order to align to best-practice standards, reporters must make their disclosures - and in particular metrics - meaningful to their audiences and truly representative of the business. This will require considered supporting narrative on both organisational context and the plans and initiatives that the business has in place.