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Risk in Context

Mind the Gap: How to Approach the Gender Pay Reporting Regulation

Posted by Eleni Petros 15 November 2016

The UK will be implementing the Gender Pay Reporting regulation in April 2017, which will require companies with at least 250 employees to publish gender pay gap information.  The new reporting aims to highlight the gap between men’s and women’s pay throughout the country, with employers required to disclose the mean and median overall pay for each gender.

While regulation may come as a positive step for employees in the UK, according to a recent survey from Mercer, a unit of Marsh & McLennan Companies, some employers have voiced concerns regarding the make-up of the new rules and the definitions used. These can differ greatly from those used by businesses. Companies are also worried about the possible risks it raises. For example, one survey participant commented that: “…there is a risk of providing in good faith a simplified statistic which could be misinterpreted and that doesn’t necessarily reflect the true position of the organisation”.

The new rules are compulsory for businesses, although those that do not comply will not be penalised. However, not reporting, or reporting a significant gap in pay figures, could lead to reputational damage and issues with attracting talent.

Employee Liability Claims Likely To Increase 

We may see a rise in claims against those employers that publish data in response to the Gender Pay Reporting. Such claims are likely to stem from:

  • Failure to promote based on sex, and gender discrimination.
  • Work/life balance issues, such as a lack of flexible working or leave for family responsibilities.
  • Pregnancy/maternity leave discrimination, including redundancies or inflexible policies.

In order to avoid the risks of gender pay gap reporting and possible resulting claims, companies should not only look to close any existing pay gaps before reporting begins, but implement diversity initiatives, and look at ways to increase equality in the workplace. For example, you might consider how your company approaches maternity and paternity leave, and look at increasing flexibility and work-life balance options for employees.

One of the best ways to address any potential gap is to look at the extent to which work is gendered, as well as the progression of female careers. The solution to the potentially misleading gender pay gap statistic lies more in talent and career management, than in pay.

In addition to these measures, insurance cover for claims relating to employment practices is available that can respond to liability claims.

To learn more about the gender pay gap rules, reporting risks for your company, potential solutions and how insurance can help ease the burden, Marsh and Mercer will be hosting an event, Mind the Gap: Navigating Gender Pay Reporting, on 16 November featuring speakers from DAC Beachcroft, XL Catlin, and Mercer. 

Eleni Petros