Last week, consultation closed on The Equality Act (Gender Pay Gap Information) Regulations. While we await publication of the final draft Regulations, the likelihood is that employers with more than 250 employees will be required to take a snapshot of information on their gender pay gap by 30 April 2017 and publish an annual report on their gender pay gap within 12 months of that date. These Regulations are seen as necessary to address the current gender pay gap, which in part is due to the under-representation of women in senior, higher-paid jobs.
Yesterday the Gadhia review stopped short of recommending mandatory gender based quotas in senior management roles, but recommended that financial service firms connect parts of the remuneration packages of their executive teams to gender balance targets. It also recommends that firms set internal targets for gender diversity in their senior management, publish progress reports annually against these targets, and appoint an executive solely responsible for gender, diversity, and inclusion. These are set out in a voluntary charter to which a number of leading financial institutions have signed up.
Today the Equality and Human Rights Commission published a report which found that the recruitment process to the boards of the UK's top companies remains shadowy and opaque and is acting as a barrier to unleashing female talent. It highlighted that men outnumber women in senior positions in the FTSE 350 by a ratio of around 4:1; three quarters of FTSE 350 companies have two or fewer women on their boards; nearly three quarters of FTSE 100 companies have no female executive director; 90% of the FTSE 250 have no female executive directors; and companies with no women on their boards are more than twice as likely to rely on personal networks to fill roles than companies with more women on their boards.
It remains to be seen what impact the gender pay gap reporting obligations, Jayne-Anne Gahdia's report and today's EHRC report will have on the gender pay gap and female representation at the top of the UK's businesses. However, the direction of travel is clear. Businesses need to address the gender pay gap and the under representation of women at the top of their organisations. In seeking to address this it is important to remember that while positive discrimination is unlawful, your business can lawfully implement positive action measures to address these issues. Positive action is optional, not a requirement. But as businesses are increasingly judged on their working practices, by taking positive action measures you may not only help to alleviate the disadvantage experienced by women, as highlighted in this week's reports, but also bring benefits to the business – both in terms of the business' ethical standing and also its bottom line.
If you need assistance in relation to gender pay gap reporting or would like to discuss what steps your business can lawfully take to address female representation at all levels, please do not hesitate to contact me or a member of the team.
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