Pay Gaps: Some significant dates
This Saturday is (apparently) “International Underlings Day”. A day – which according to the limited blurb available – is set aside to acknowledge the work that more junior employees in every organisation undertake to keep the corporate machine in full working order.
The day was first proposed and “celebrated” way back in 1984. It’s never really caught on, and that may be because the day is only recognised on the 29th of February. Choosing a date that only arrived once every four years was apparently a conscious decision to emphasise how underlings are so often overlooked, and indeed to highlight the difference in recognition and remuneration between rank and file employees and those at the top of any organisation.
Progress has been made
Yet some progress has recently been made on this point. From 2020 onwards some larger UK organisations are required to report on Executive Pay Transparency which includes details of the gap in pay between top bosses and their average worker. This new requirement builds on the 2017 Gender Pay Gap requirements which are now part of the corporate reporting landscape for employers with more than 250 employees.
Of course these are not the only notable pay-differences in the UK workplace, and it’s unlikely that the required reporting will stop there. Valid concerns are being raised in the corridors of power about both the disability pay gap and also the ethnicity pay gap. So this is likely to be one area of annual corporate reporting that may grow in the years ahead.
Of course the new reporting requirements are very far from perfect, and currently omit some important areas of the compensation package. But they do at least represent a useful starting position for those many organisations that really want to show that they are aware of such issues, and also to demonstrate progress following their improvements in this area over time.
That said - and based on recent conversations with Human Resources professionals at a wide variety of employers - it’s evident that many employers are really not prepared for (and indeed sometimes not even aware of) the new 2020 requirements. There is clearly much work to be done here across many organisations and sectors.
It’s also interesting that some employers have suggested that they would ideally like to go further than the legal minimum reporting to really demonstrate their organisations commitment to tackling such issues.
Employers need to take action
But, regardless of the level of reporting undertaken, the reality is that pay-gaps are part-and-parcel of Western society and commerce, and have been so for many centuries. It follows that formally reporting on the gaps in existence is only a starting point in the journey – albeit a very useful one.
What follows will probably be much more difficult, as employers look to correct any excessive and/or inappropriate differentials. This will take time, and will often be a challenging – and sometimes rather delicate – exercise to undertake. Employers will need to balance many conflicting pressures in undertaking this task, including staff morale, the need to attract and retain talent, shareholder pressure, media scrutiny, and employment law. Plus the always critical need to protect profit margins and/or funding streams so that the employer can continue in business.
But, for the moment, it’s really important that business leaders and senior HR professionals comply with the minimum rules for disclosure within the timescales available, and accordingly instruct their teams to take action in this respect. It is of course slightly ironic – but not inappropriate given our proximity to the 2020 International Underlings Day – that junior employees are likely to be essential in the completion of this routine but nevertheless essential task.
Psyon, which is part of Howden Employee Benefits & Wellbeing, has launched Psyon Pay Intelligence Services to help employers with their gender pay gap reporting and address any imbalance, as well as helping those that want to understand and report other pay gaps, which may become statutory in the future.
Steve is Head of Benefits Strategy, Howden Employee Benefits & Wellbeing, and is an award-winning thought leader on Pensions, Employee Benefits, and Human Resources issues. He is occasionally accused of making Employee Benefits interesting.