Gender pay reporting – managing the consequences

Now that large companies have published their gender pay reports, the results are out in the public for everyone to scrutinise and analyse.

This includes employees.

They may feel confused, aggrieved or angry at what they have read, so it’s important to think about how you are going to manage the situation to avoid widespread dissatisfaction, low morale or tense relations within the organisation.

Talk to your employees

Don’t just ignore the elephant in the room. Your senior management team should talk to your employees and make clear that it is an issue they are taking seriously and they are looking to take appropriate measures.

Think about next steps

Some possible measures you could consider include:

  • reviewing pay, reward and career progression processes
  • providing training to tackle unconscious bias to all those in charge of recruitment and employment decisions
  • placing more emphasis on flexible working arrangements.

These measures should also be beneficial if you are facing any reputational damage – they can help curb a negative impact on attracting and retaining talent.

Be careful how you deal with pay discussions amongst employees

There is a common misconception that the Equality Act bans ‘pay secrecy clauses’ in Contracts of Employment. The truth is that section 77 of the Equality Act does not impose a general ban on any terms in the contract preventing pay discussions, but it does render pay secrecy clauses unenforceable if the employer is trying to stop or restrict employees from making ‘a relevant pay disclosure’.

A relevant pay disclosure refers to a contractual clause which prevents pay discussions that try to establish whether there is any discrimination going on, for example, on the basis of sex.

So imagine one of your female employees suspects she is not paid the same amount as her male colleague. One day, when the office is quiet, she asks her colleague what his base salary is. When he tells her, you find out and decide to deny him training opportunities as a result. In light of this unfavourable treatment, the male colleague could lodge a claim to an Employment Tribunal against you for victimisation.

However, if over a lunch break, a group of your employees are chatting about their performance bonus with some complaining how little they received and others boasting about how much they have earned, this will not fall within the scope of section 77. This is because they are not talking about pay with the aim of finding out whether and to what extent there are discriminatory differences in pay.

The obvious problem with section 77 of the Equality Act is how do you know if the employee is trying to find out whether there is discrimination going on, or just indulging in some workplace chit chat? Without reading their mind, it can be hard!

Keep employees in the loop

Remember that this is an ongoing issue. Employees will want to know how things are progressing and if you are delivering what you said you would.

If you would like to discuss this further, contact your Employment Law Adviser who can guide you.