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Gender Pay Gap Reporting and Positive Action: Time to Think Outside the Box?

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The Equality and Human Rights Commission (EHRC) announced at the end of last month that they will be extending the deadline for gender pay gap reporting for the 2020/2021 reporting year from 4 April 2021 to 5 October 2021.  The extension follows the EHRC's decision in 2020 to suspend mandatory gender pay gap reporting entirely for the 2019/2020 reporting year to ease the burden on employers in light of the pandemic.

Many private sector employers had already gathered the necessary data, albeit very few had published their data yet.  However, the extension will give those employers who have had to prioritise other matters during the pandemic more time to gather the data to comply with the mandatory reporting. It also provides all employers (who have yet to publish their data) with an opportunity to reflect on their current recruitment and hiring practices and create or develop an action plan to address their gender pay gap, which will help employers contextualise the data published.

The Women and Equalities Committee, in a recent report, suggests that Covid-19 has disproportionately impacted women in the workplace. There are various reasons for this, including that women disproportionately work in part-time service sector employment, and thus have experienced higher levels of job insecurity. While the 2020 figures are unlikely to show the impact of the pandemic in a meaningful way, employers can expect that future pay gap reporting will show these impacts for some years to come. The heightened focus on the unequal impact of the pandemic may well also result in greater scrutiny of employers' gender pay gap figures over the coming years. The European Commission has now also added its voice to the ever-growing conversation about gender pay gap reporting with the proposal of a new directive. If implemented, this directive would require gender pay gap reporting (similar to UK reporting rules, with additional measures introduced to show differentials within certain groups or pay brackets in a workforce) to be introduced across Europe. We can therefore expect additional enhanced focus on gender pay over the coming years as the directive is debated and works its way into the canon of EU law.

Now more than ever, employers will therefore want to take action in relation to any inequalities identified in the workforce, and this six-month extension provides some breathing space to do so. Developing action plans to address the gender pay gap now would help employers contextualise their 2020 figures, and also lay the groundwork for 2021 reporting. In so doing, employers can begin to address the impact of the pandemic and show their commitment to addressing inequality in their pay structures.

Employers wishing to explore measures to address their gender pay gap and develop their action plans may wish to consider their options under the positive action provisions in the Equality Act 2010. Employers can lawfully take 'general' positive action measures where (broadly speaking) they reasonably believe that persons sharing a protected characteristic, in this case sex/gender, suffer a disadvantage linked to their sex, have a particular need (such as a training need) or are underrepresented in the workforce or any particular segment of the workforce.

Positive action can be a very powerful tool in an employer's diversity strategy, for example to address the underrepresentation of women in senior management positions. There is no limit on the action that an employer may take as long as it is proportionate. This means that the action must address the issues that the employer has identified, and it must be the least discriminatory method available to address that issue. Examples include internal mentoring programs or support groups, diversity targets for senior management or board appointments, and gender-balanced short-listing.   

The other way that employers can use positive action is to use a 'tie-breaker' provision in recruitment or promotion, which allows an employer faced with two equally qualified candidates for a position to prefer a candidate based on their protected characteristic. Again, where an employer plans to use the provision to boost female participation in particular segments of the workforce, they must have a reasonable belief that women either suffer a disadvantage related to their sex/gender, or are disproportionately underrepresented in that segment of the workforce. The tie-breaker can be very useful on a case by case basis, for example in relation to appointments to senior leadership positions. To ensure that a 'tie-breaker' appointment is not open to challenge as unlawful positive discrimination, employers must give thought to designing recruitment processes by reference to clear and objective recruitment criteria, which will help employers assess whether two candidates really are equally qualified.

Both positive actions provisions exist to help employers create a more diverse and effective workforce. The additional six months that employers have to report on the gender pay gap may be a useful time to start thinking a little outside the box on how you can use these provisions to reduce your gender pay gap, counter-act any impact that the pandemic will have on your gender pay figures, and create a more diverse leadership.

To discuss your options in relation to positive action measures, please reach out to a member of the team.
 
This article was co-written by Shafagh Daneshfar.

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