Article:

Deep dive: equal pay vs the gender pay gap

Written by Matthew Jenkin Thursday 18 November 2021
As we mark Equal Pay Day, we explore what managers need to understand about tackling gender-based pay inequality in 2021. And it’s more than just compliance
An image of a man and a woman either side of a chasm that has the word pay in it

The debate over equal pay has been a cause for concern for many decades. Though progress has been made, there are still worrying discrepancies between the salaries of women and men.

As we mark Equal Pay Day on 18 November, a new report by the APD Research Institute has found that more than a third of British women do not believe there is pay equality in their organisation, with more than half of UK employees reporting that “my company states there is pay equality, but I haven’t seen it”. More concretely, only 68% of women in the UK received a pay rise or bonus for taking on new roles and extra responsibilities, compared to 76% of men.

But be aware – equal pay is not the same as the gender pay gap

In a nutshell, equal pay means the jobs given to men and women do not have to be identical but must be substantially equal. This does not mean that all employees have to be paid the same wage, of course. Differences in pay are permitted but any difference must be based on reasons other than sex. In the UK, employers are legally required to provide equal pay to both men and women if the work they do is the same or broadly similar, under the Equality Act 2010.

Subsequently, not providing equal pay for all employees increases the risks of facing a potentially costly equal pay claim. Asda, for example, found out the hard way when in March 2021 the Supreme Court upheld an earlier court ruling that lower-paid shop staff, who are mostly women, can compare themselves with higher paid warehouse workers, who are mostly men.

In contrast, the gender pay gap refers to the percentage difference between average hourly earnings for all men and women in a company, sector or across the country. If women are being paid more, that’s called a negative pay gap.

The UK continues to lag behind compared to other western countries in this respect. This year there has also been an evident increase in the UK’s gender pay gap, rising from 10.6% last year to 11.9% in 2021, with younger women now also affected. Of course, the pandemic has played a major role in widening the gap: Covid has had a disproportionate impact on women, who have been more likely to lose work and earnings during the pandemic.

Having a gender pay gap is not illegal, but it is compulsory for all UK employers with more than 250 workers to publish their gender pay gap data.

Read next: What does best-practice Gender Pay Gap reporting look like? 

What can managers do to ensure equal pay?

The first step in ensuring equal pay is identifying whether there is a problem within your organisation. To do that it’s important to carry out an equal pay audit, which the Equality and Human Rights Commission recommends is done regularly. Managers should then set up an equal pay group to assess the findings and then communicate the results to staff.

Furthermore, when hiring, monitor starting salaries and provide extra training and guidance for team members involved in pay decisions. For example, staff need to be aware that asking for someone’s previous salary level can perpetuate the so-called salary ‘ask-gap’.

Find out more

Find more resources and guidance to support gender equality at work – including CMI’s gender pay gap toolkit and the latest relevant events – on CMI’s gender equality hub and in the Making Hybrid Inclusive report.

To the Gender Equality hub To the Making Hybrid Inclusive report

 

How is that different to closing the pay gap?

As with equal pay, in order for managers to identify disparities, and take action to address any issue, reporting and analysis is crucial to tackling the gender pay gap.

Kate Palmer, HR advice and consultancy director at Peninsula, says: “Requiring large employers to report this data is a good step in the right direction. As is said, what isn’t known, won’t get fixed. Fixing the spotlight on those organisations that are falling down in this will encourage them to do better and make them accountable for the decisions that have been made.”

But be warned: understanding the reasons behind any gender pay gap is a complex, and sometimes controversial, issue. Kate explains that the reasons behind the gap stems partly from traditional gender roles, which place greater emphasis on women as caregivers: this often results in women choosing to reduce their hours and responsibilities, leading to lower pay and opportunities. Factors such as the menopause can also make women less likely to apply for promotions and more likely to leave the workforce.

The role of remote working

At the beginning of the Covid crisis, there were hopes that the wider adoption of remote working might remove the gender divide. However, experts are now warning the danger of the hybrid working model is that men will choose to go to the office and women will stay at home, their careers suffering as a result of reduced visibility.

“Our own recent research with The Work Foundation found that … despite the huge recent shift by many to hybrid working there is a mismatch between attitudes of some managers and their teams,” explains Ann Francke, chief executive of CMI.

“There is a real perception of ‘office culture’ and some managers are unwilling to implement hybrid-working practices. Our results also suggest women are less comfortable than men in discussing a remote work request with their manager. Women are also less likely than men to feel their organisation is inclusive of remote workers. This needs to change.”

Employers must therefore carefully monitor their new working policies to make sure women aren’t disadvantaged and have the same opportunities to progress into management and leadership roles if they so wish. CMI’s ‘Making Hybrid Inclusive’ employer guide outlines some key actions, including continually communicating and consulting with staff; experimenting with remote working models to find what works for their organisation/teams; implementing a right to disconnect to ensure employees don’t burn out (Portugal has just made it illegal to text staff out of hours); and acting as a supportive role model by also embracing remote or flexible working practices.

But the most important thing to remember is that equal pay and closing the gender pay gap is about more than just compliance. In an era where company culture and social responsibility are key deciding factors for jobseekers, pay systems that are transparent and reward the entire workforce fairly send out a positive message about an organisation’s values. Not only will that result in organisations attracting the best talent, it will reduce staff absence and improve retention. It’s a win-win for employers and society.

Image: Shutterstock/Ink Drop

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