The pandemic has thrown many existing workplace issues into the spotlight; the need for flexible working, disparities created by gender privilege and, notably, a demand for fair and transparent pay.
From our nurses to our refuse collectors, the often under-appreciated but essential roles played by key workers in our every day lives have been pulled into the public consciousness and calls are often heard that they, not just their bosses at the top, deserve to be compensated fairly for their hard work.
British culture has a history of awkwardness when it comes to discussing financial matters. But, with a new generation of workers has come a different perspective on money and a demand for open and inclusive workplace cultures.
Let’s take a look at the current rules regarding pay transparency, what makes it so important and why employers should make it their priority.
Do I legally have to declare my businesses pay structures?
There is currently no legal requirement on employers to be transparent about pay. However, there are two statutory employment law provisions that touch on this:
- “Pay secrecy clauses” where employees are contractually asked not to discuss their pay with their colleagues are unenforceable, especially in incidents where disclosure might reveal potential pay discrimination
- Employers with staff numbers of 250 and above are required to report on their gender pay gap
In March 2020, compulsory gender pay gap reporting was suspended for the 2019/20 year shortly before the deadline, although more than half of employers voluntarily published their statistics anyway. The Government confirmed in December that it would resume reporting for this year, but in February – as the pandemic raged on – it was announced that any enforcement action on employers would be postponed until October 2021, essentially providing a deadline extension.
Are the current laws likely to change?
The Fawcett Society, the UK’s leading campaigner for gender equality and women’s rights, published a report comparing gender pay reporting legislation in 10 countries across the world and found the UK to be “unique in its light-touch approach”.
The results of such research are finding their way into the hands of politicians and currently the Equal Pay Information and Claims Bill is making its ways through Parliament, which would make it mandatory for companies with at least 100 employees to declare not just their gender pay gap, but their ethnicity pay gap too.
In January 2019, the Government closed a consultation on ethnicity pay gap reporting but no further action was taken. Despite this, there has been an increasing number of employers voluntarily offering their statistics, but this number remains small.
Why should I prioritise pay transparency if I don’t have to?
Pay transparency and pay gap reporting are important tools in promoting diversity and inclusion in the workplace. Here are some of the ways it can enhance your recruitment, retention and company culture:
- Disclosing salaries can help attract attention to an organisation and elevate an employer’s appeal by giving job hunters an early insight into your business’ values, especially around openness and fairness, and shows that your people are valued assets. In fact, software company Beqom recently released a report into pay transparency – post Covid – in the US and found that 58% of employees would consider switching jobs for more pay transparency, and this number jumps to 70% for Gen-Z workers – a clear indication of the increasing appeal of transparency, especially if employers want to attract and retain young talent.
- Pay transparency may help attract and retain a more diverse workforce. Unconscious bias triggered by gender, age and race can influence salary decisions, but greater transparency helps uncover this and encourages more objective decision making. Removing salary negotiation during the hiring or promotion process can also help reduce gender and ethnicity pay gaps. Commenting in the New York Times, researcher Dr Morela Hernandez said women are unfairly viewed as less likeable when they negotiate, while black job applicants are seen as more pushy than white applicants.
- Disclosure can result in increased employee productivity, especially for more junior employees who may be motivated by seeing the salaries of those more senior to them.
It’s fair to say that there are some things to be aware of when it comes to pay transparency. It can cause some disruption if it transpires that there are salary disparities between colleagues at a similar level and could give rise to claims of pay discrimination – just think of the BBC when it first published a list of its top earners in 2017.
However, this transparency encourages employers to deal with pay equality issues head on, rather than avoiding them and suffering reputational damage down the line. Crucially, you will never take steps in improving your workplace culture unless you’re prepared to get comfortable with the uncomfortable.
Where do I start?
With few legal requirements, you have the ability to shape the conversation around pay transparency at your organisation. With companies, such as Glass Door, PayScale and Salary.com already publishing salary details and market comparisons using employee information, why not take control of the narrative, be a “mover” in your industry and get ahead of the curve?
Here are some factors to consider:
- What data do you actually have? A pay audit will help to highlight any areas of weakness.
- What information can you legally share, taking into account data privacy obligations?
- How good are your records? Poor record-keeping can often lead to uncertainties over who is paid what, and why. This makes salary and promotion decisions hard to justify if challenged.
- What do your employees really want to know? According Begom’s report, 37% of employees are interested in understanding the average compensation for every position at their company. Conducting an employee survey before taking any action may provide you with answers.
- Should you only focus on pay transparency? Salary packages contain much more than simple pay, for example, there are also annual leave benefits, employee discounts and flexible working options, which could also be disclosed to give a more rounded view of what your company has to offer, especially if you’re concerned that your pay is not market leading.
Is your gender pay gap reporting weighing heavy on your mind? Struggling to find the time? At Tell Jane, we can help analyse data for your report, as well as compose your supporting narrative and help implement an action plan for closing the gap. Email me at email@example.com to find out more.