EEF has responded to the Government's consultation on closing the gender pay gap.
When asked about their awareness of the forthcoming gender pay reporting requirements, some 83% of respondents said they were aware and 14% said they weren’t aware. We believe that the strong awareness amongst EEF members was due to the communications to our membership on the issue, and indeed many manufacturers outside of EEF’s membership signed up to attend our webinar. However, we have concerns that businesses that are not members of a business organisation or trade association will not be as prepared for the forthcoming changes as our members will be
However, whilst awareness may be high of the forthcoming changes, not all manufacturers are up-to-speed with the likely future requirements of gender pay reporting, as only 7% stated they were completely up to speed. The majority (44%) said they could do more and 36% has significant gaps. Of concern, 13% said they had no understanding at all of gender pay reporting. Unsurprising then, 36% of survey respondents said they were completely unprepared for the introduction of gender pay reporting, and a further 27% said they were somewhat unprepared. This compares to just 27% are said they were somewhat prepared and 8% completely prepared.
We therefore believe that these results demonstrate that the introduction of gender pay reporting will require a measured approach – with time allowed for larger businesses to report first, followed by a phasing in of the requirements for smaller businesses. Whilst it may seem that businesses with over 250 employees will have the resources and systems in place to comply with the new reporting requirement, our experience of mid-size EEF members is that they have very limited internal HR and compliance functions and may need external support, at least at the start, to comply with the new legislation.
Manufacturers do see some benefits of reporting their gender pay gap, with almost half (47%) stating it was a great opportunity to benchmark their companies against similar companies and other industries. In addition, 38% said that the work that they would need to undertake to provide the data will be helpful in terms of getting to grips with their companies’ pay structure.
It seems clear from our survey responses that businesses will embrace gender pay positively, but that they will need flexibility in order to do so. Comparability of gender pay reporting between different businesses, which is a key outcome, will require a simple calculation of the gender pay gap, and one that is based on basic pay only. Including many, different, employer-specific pay variables will result in a metric that is incapable of comparison. An average, or median, hourly rate based on basic pay could provide such a standard metric capable of widespread comparison, but employers who wish to go further than this should be allowed to do so. Similarly, an employers who wished to add a narrative, and explain what they were doing to reduce the gender pay gap should be permitted, but not required, to do so.
Finally, employers should be able to determine the method of publication of their gender pay gap information provided that it was widely available to those who are likely to have a legitimate interest in it.
Read our full response below.