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Match of the Pay: Closing the pay gap

Michael Newman and Gabriel Morrison, of Leigh Day's employment team, discuss pay discrepancies following the publication of the BBC's highest earners.

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Michael Newman is a partner in the employment department where he specialises in equal pay and discrimination claims. Gabriel Morrison is a trainee solicitor who works with Michael in the team.
In being forced by the government to publish statistics of their highest earners under the new Royal Charter, the BBC has brought pay discrepancies for women and minority groups into sharp public focus. 

Aside from raising sensible questions about whether certain sporting pundits are being paid too much for rehearsing tired clichés, the revelations about the pay differences at the BBC, one of Britain’s most famous institutions, has led to criticism. Of the 96 top earners, the figures showed that only a third are women and the top seven are all men. In addition, only 10 of the 96 were from a minority ethnic background. The statistics resulted in Theresa May criticising the BBC for how they “pay women and how they pay men for doing the same work".

First of all, it is important to recognise the distinction between equal pay (as acknowledged by Mrs May) and the gender pay gap. Equal pay - the right for men and women to receive equal pay for performing equal work - has been enshrined in UK legislation since 1970. On the other hand, the gender pay gap is simply a measure of the difference between men and women’s average pay. This means that an employer not paying women equal pay for equal work is likely to be unlawful, but an employer having a gender pay gap is not. 

Unfortunately, the gender pay gap at the BBC is reflective of a depressing national trend. In fact, if the figures are accurate, the BBC is actually doing better than the national average – 10% when compared to the 18.1% reported by the Office for National Statistics (ONS). A forecast conducted by Deloitte last year found that it will take until 2069 for pay parity between men and women to close. Minority groups do not fare much better nationally – in 2016, a study conducted by the TUC on ONS statistics established that the pay gap between black, Asian and minority ethnic (BAME) graduates and white graduates is 10.3%.

So, what can be done to ensure that these inequalities are addressed more quickly? Firstly, recognising when pay gaps emerge may help identify solutions. Research conducted by the Joseph Rowntree Foundation last year found the gender pay gap widens consistently for 12 years after the first child is born, by which point women receive 33% less pay per hour than men. By encouraging modern flexible working practices or assisting new mothers with care arrangements, employers can help to ensure that women are not playing catch up with men when they do return to work after maternity leave. 

Ensuring that employers demonstrate similar levels of transparency as that required of the BBC would also surely be a good step. Gender pay gap reporting regulations came into force in April this year, compelling companies with more than 250 employees to collect and publish statistics on the gender pay gap for their organisation. This is an encouraging start, but is it not right that similar regulations are rolled out for all protected people under the Equality Act? An election pledge requiring companies to publish race pay gap reporting featured in the Conservatives election campaign in 2017, but this pledge was sadly absent in the ensuing Queen’s Speech. More than hollow promises will be necessary going forwards.

It is also doubtful whether reporting requirements go far enough by just “naming and shaming” offending companies. Reputational risk for an employer is one thing, but it provides no guarantee that any meaningful action will be taken. Where pay gap inequalities are identified, companies should be required to create an action plan. This was encouraged by the government when the reporting regulations were passed, but it is not mandatory. Mere reporting is toothless unless companies are required to devise a plan to actively implement change. Fines should also be introduced for companies where no improvement is seen within a set timeframe.

It is striking that MPs have already announced their intention to haul BBC bosses before a select committee to answer questions on the pay gap. It is important that the same level of scrutiny is afforded to all employers and that the momentum on the debate is not lost. Ignoring pay gap inequalities needs to be bad for business. 

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