The issue of the gender pay gap has been swirling around boardrooms for the last few years. Creating fair and reflective remuneration structures for all staff has been made a priority, especially with the Gender Pay Reporting Regulations coming into effect from 1 April this year. From that date employers with more than 250 workers will have to produce gender pay reports.
The BBC's announcement on 26 January that the salaries of senior male journalists were to be cut in response to the recent outcry on inequality of pay within the corporation was a bold one. Auntie Beeb, it would seem, was taking the men to task. But Auntie allowed those men to be paid at that level – far in excess of their female colleagues – in the first place.
The problem with cutting male workers’ salaries is that it leaves employers exposed to even more claims of discrimination. This is not a case of C-level executives turning down bonuses after shareholder outrage. There appears to have been some behind-the-scenes negotiations in which individual employees are taking the fall for something that the institution has created.
An employer cannot simply slash a worker’s remuneration package, certainly not on the basis of gender. Asking any employee to take a pay cut without proper process and reasoning is a very risky move, especially if there is no commercial or performance rationale for doing so. Organisations are leaving themselves open to constructive and unfair dismissal claims because they cannot insist on pay cuts or reducing pay without consent.
Any employer following the BBC’s lead would likely find itself at risk of claims of unduly pressuring staff into the cut or that the cut was based exclusively on their gender. The logic would be just as hazardous if employers were cutting staff salaries based on race, sexual orientation or disability.
Unfair pay structures
The other major issue with such pay reductions is that the decision can be construed as an admission that an employer has got their pay structure wrong. In this case, it could be claimed that the BBC is effectively openly acknowledging that it has implemented and operated an unfair pay structure based on gender. (In fact, it only took a few days before a group of 170 BBC female employees or former employees were reported to be looking at demands for back pay and pension adjustments over the disparity).
Evidently this is problematic if female employees look to bring equal pay claims in the future. This also extends to public image; how can organisations hire and retain top talent of all types if the employer is then seen to follow such an example. Will men join if they think their pay may be slashed because of some data points beyond their control? Likewise, will women want to join an organisation in which they are told that there is effectively institutional disparity in pay? Hardly an encouraging environment.
So as the 1 April date looms, organsiations may have already collected and digested their data but they have to think very carefully about how they present and react to the details. Many employers will have skewed figures that appear to show an imbalance of pay against women.
On paper such findings may look bad but it is how an employer responds to those figures that is key. There are numerous variables that can and do shape the gender pay gap figures so organisations should be looking at ways to create and implement a transparent strategy to respond positively to any issues that have been highlighted. That is what the government, candidates and employees are looking for.
Discrimination still exists, so organisations should continue in their efforts to establish that all staff are treated in a fair and reasonable way. Hurried decisions over published pay gap figures may win some PR credit in the short term but they may do lasting damage to both the workforce and the organisation.
Jules Quinn is a partner in the London office of King & Spalding