[UK] Employers ignoring gender pay gap risk litigation

Employers are being encouraged to invest in gender pay gap studies to make sure that they do not expose themselves to an expensive tribunal case, The HR Director reports.

The requirement for larger companies (those with 250 employees or more) to publish their gender pay gap confirms both that the disparity exists and that the gap appears to be widening.  Initial analysis of the 2019 gender pay gap reports suggests three-quarters of companies give men higher pay than women.

One of the widest gender pay gaps is in the financial services sector. For the sector as a whole, the 2019 figures show a decrease in pay disparity of around 0.5 per cent over the past year. Yet the reduction disguises the reality, more than one-third of financial services companies have seen an increase in the gender pay gap based on a review of data from the 89 largest businesses.

The average gender pay gap at Royal Bank of Scotland (RBS) was 36.8 per cent, according to its 2019 gender pay gap data.  That represents one of the biggest gaps reported by a firm with 5,000 employees or more. A former RBS employee recently reached a settlement of £150,000 with her employer to conclude her equal pay case against the bank.

While the bank reportedly disagreed that any discrepancy in pay was based on the gender of the employee, and said that it took a fair and inclusive approach to setting pay, it agreed that it had not “got things right in certain areas” and settled in order to resolve the matter.

David Scott - Senior Associate solicitor at Hethertons solicitors - said, “An equal pay claim is one of the costliest types of litigation in the Employment Tribunal, not just in legal costs but also in the management time and disruption to the business it entails.”

Mr Scott advises that businesses should consider “seeking professional assistance to produce a gender pay gap report, even where they don’t have a legal requirement to do so.” He added, “It will give you have a better insight into your pay structure, how it compares with those companies that have published their reports and allow you to identify any disparities.”

“Having the knowledge of a potential pay gap will not only allow you to consider the reasons for it and develop strategies to eliminate any potential issues associated with unequal pay, but it will also help companies to avoid costly litigation in the Employment Tribunal, motivate employees, improve recruitment and make sure that businesses are doing the right thing.”