Wake-up call – Mind the gender gap

20 January 2012
Wake-up call – Mind the gender gap

There has been progress in closing the gender pay gap, but women are still some way of parity with their male colleagues. Emilie Bennetts examines equal pay legislation and how to avoid discrimination claims

On the face of it, it seems that the gender pay gap is closing. The Office for National Statistics recently reported that the gap in earnings between men and women has fallen to under 10% for the very first time. Earnings for a man in full-time employment, excluding overtime, stood at £13.11 an hour in April 2011, an increase of 0.8% on the previous year. Equivalent earnings for a woman were £11.91 an hour, an increase of 1.9%. If this trend continues, women will begin to earn more than men in nine years' time.

The problem
In spite of this clear indication of progress, the gender pay gap continues to create a rift. Research from the Chartered Management Institute indicates that male executives reached an average salary of £42,441 over the 12 months preceding 31 August 2011; £10,546 more than women carrying out similar jobs. There is also a lack of female presence in the board room in many companies. What can be done to remedy this?

In February 2011, Lord Davies of Abersoch released his report, Women on Boards, which reviewed female representation at senior levels in UK plcs. This report sets out recommendations to improve the gender balance in business, one suggestion being that FTSE 100 companies should aim to have at least 25% female board representation by 2015. This would be an increase from the 12.5% reported in 2010 and would mean that a third of appointments over the next four years would have to be women.

In spite of external factors such as child-rearing affecting the number of women at the top, the fact that Lord Davies' report indicated that over a third of those questioned believed that "bias, prejudice and stereotypical behaviour" were the biggest issue for women moving up the corporate ladder indicates that discrimination continues to prevail.

The Law
The Equal Pay Act 1970 was brought in at a time when it was common for employers to openly give different rates of pay to men and women performing the same job. Although such overt discrimination is less common today, a significant gender pay gap still exists and there is no doubt that sex discrimination still exists in some organisations.

The Equality Act 2010 (which has replaced the Equal Pay Act) sets out the principle that men and women should receive equal pay for equal work. The Equality Act also sets out that it is unlawful to treat a woman less favourably than a man because of her sex. This can apply to matters other than salary, such as promotions and discretionary bonuses.

Expert advice
Equal pay claims form a major part of the work of employment tribunals and, along with sex discrimination claims, can have devastating financial consequences if they are successful. They can also generate negative publicity for an employer.

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â- Consider carrying out an equal pay audit to review whether there are any gender based pay inequalities in your company, and put these right. Bear in mind that there is a risk that if any inequalities are discovered, employees will bring equal pay claims for back pay.

A successful equal pay claim can have serious financial consequences for an employer. It will mean that an employment tribunal will make a declaration of the claimant's rights, including any increase in salary. In addition to this, the tribunal can require payment of arrears of pay and interest going back as far as six years.

Compensation for discrimination claims is potentially uncapped and can include an award for injury to feelings of up to £30,000. Employers who are concerned that they may have pay inequality in their workplace should seek legal advice.

Emilie Bennetts is a solicitor at Charles Russellemilie.bennetts@charlesrussell.co.uk

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