How to prepare for pay equality reporting

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Race and disability pay gap reporting could prove much more difficult than with gender reporting

Six months on from the implementation of new regulations on gender pay equality, we are starting to see more employers publish their gender pay gap figures. However, the concept of sharing what has traditionally been private is a significant cultural and operational shift for many employers. While some are taking bold steps forward others will inevitably find it harder to adapt.

Pay equality is nevertheless an issue that every employer will need to weave into the fabric of their organisation; a message that was made loud and clear by the Equality and Human Rights Commission (ECHR). The ECHR indicated that businesses should be reporting on ethnicity and disability pay gaps, as well as gender, in a move to reduce discrimination in the workplace.

There are a lot of statistics quoted in the ECHR paper, Fair opportunities for all: a strategy to reduce pay gaps in Britain, which show that people with certain conditions or from specific backgrounds suffer significant pay differentials when compared with colleagues.

Herein lies one of the obvious problems with imposing reporting on these pay gaps: with gender pay reporting the categorisation of employees is, in the main, binary – they are regarded by the law as either male or female and so the reporting structure requires categorisation of people into one of two groups.

With ethnicity and disability there is a broader spectrum of possible classification, which makes it a lot more difficult for employers to report on. Any regulations passed to implement the EHRC recommendations will need to prescribe how ethnicity and disability are categorised. With ethnicity the potential list of categories is almost endless, as is the range of possible conditions that may qualify an individual as disabled within the meaning of the Equality Act 2010.

But there is an additional issue here – while an employer may regard someone as disabled the individual themselves may not. Personal identity is a very subjective matter. If employers are required to report on these pay gaps, or ask employees to categorise themselves, the data has to be accurate and meaningful.

In the absence of any draft regulations in this area it will be difficult for employers to take action. However, there are steps businesses can take to reduce discrimination in the workplace, whether in relation to pay equality or otherwise.

  • Ensure shortlisting of candidates is done 'blind'; without reference to gender, ethnicity or disability.
  • If your workforce is not representative of the demographics of society ask whether you are advertising and recruiting in the right place or in the right way.
  • Consider what roles and hours you stipulate in job advertisements. Recruiting for part time or flexitime roles will undoubtedly expose your organisation to a much wider talent pool than traditional five days a week, full-time vacancies.
  • Conduct meaningful employee engagement processes – find out what matters to your staff and listen to what they say about how the workplace may be improved.
  • Engender a culture of diversity and respect. This can be done both by direct training and awareness, but also by encouraging and rewarding 'good behaviour' and making sure managers and leaders are leading by example.
  • Audit your internal pay review and bonus processes to ensure transparency and fairness. Build in a secondary check and test your rates and practices against the market, both in your sector and your geography.
  • Consider commissioning a review of your internal pay and bonus processes by an external consultant. This will help you highlight and address any issues. If you are transparent with staff about this work and share the results and any subsequent actions this will further assist in creating the right culture.

Esther Smith is a partner at UK law firm TLT

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