The interaction between gender pay gap reporting and family-friendly policies

Dr Anne Sammon considers the likely impact on family-friendly policies with the Government’s anticipated plans for mandatory gender pay gap reporting.

The gender pay gap regulations

It is anticipated that new regulations on a mandatory duty to report on gender pay gap data will come into force on 01 October 2016, with the first reports due to be published using data from April 2017. Whilst the legislation is yet to be finalised, it is clear that it will apply to all employers with at least 250 employees and that they will be required to publish the relevant information on an annual basis. As well as providing data, employers will be able to provide a narrative explaining the reasons for any gender pay gap and measures that have been taken to address this.

How are family-friendly policies relevant to the gender pay gap

There is a substantial body of research on the gender pay gap that suggests that one of the reasons for the disparity in pay between men and women is what is often referred to as the “motherhood penalty”. This occurs after women have taken time off for maternity leave and continues thereafter throughout their careers and not simply during their child-rearing years. Research attributes the “motherhood penalty” to a variety of factors including: a lack of part-time work available at senior levels, leading to women opting to remain in more junior roles or even in some cases relinquishing senior roles to become more junior; larger numbers of women than men exercising their rights to family-friendly rights, such as parental leave, emergency dependant’s leave and flexible working; and a (perceived) inability to combine more senior roles with active participation in parenting responsibilities.

Appropriately drafted family-friendly policies can help to address the issues identified above. In the context of gender pay gap reporting, they are also likely to be very helpful in demonstrating that an employer has taken reasonable steps to address the “motherhood penalty”, which is a root cause of the gender pay gap. By way of an example, one of the obligations under the gender pay gap reporting duty will be to report the numbers of men and women in each of four salary quartiles. This will highlight those employers where there are low numbers of women earning high salaries. If, as an employer, you have a low number of women in the highest salary quartile, but you can provide a narrative that you have taken steps to address this (for example, by having an effective flexible working policy that allows everyone, irrespective of seniority, the opportunity to work flexibly, subject to the requirements of their roles), this is likely to be viewed more favourably than if no steps have been taken to address the issue. A recent report by the Fawcett Society (Parents, work and care: striking the balance) recommends that fathers (and other second carers) should be given paid leave to encourage their more equal participation in relation to childcare.

What should employers be doing now in relation to family-friendly policies?

The duty to report on gender pay gap data will only relate to data from April 2017, with an obligation to publish the data within 12 months of this date. However, if employers want to provide a narrative arguing that they have taken such steps to address any gender pay gap and have implemented a package of measures designed to reduce or eliminate the “motherhood penalty”, any policies that they seek to rely on would, ideally, be in force in advance of April 2017.

Employers may also want to consider whether there are other initiatives, such as providing on-site crèche facilities, extending periods of paid leave and offering emergency childcare, might make a difference to any gender pay gap issues specific to their organisation. Incorporating such measures into a more holistic approach to family-friendly issues is more likely to effect change than paper policies alone.

Given the raft of changes to family-friendly legislation in recent years, including the introduction of Shared Parental Leave, now would be a good time for employers to consider whether their current policies, when taken as a whole, achieve the organisation’s desired objectives, including those that relate to the gender pay gap.

If you have any questions in relation to this article or have a particular issue that you would like Anne to address in a future edition, please email anne.sammon@simmons-simmons.com

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.