Will gender pay gap regulations embarrass construction?
Construction's dire record on employing women is likely to be exposed again when regulations on gender pay gap reporting come into effect later this year. Stuart Neilson explains.
The construction industry has a problem attracting women, and that may be about to get worse.
On 6 October, new legislation comes into effect that will require all employers with more than 250 employees to publish, on an annual basis, information about their gender pay gap.
Employers will have to make their first pay gap calculation in April 2017, and then publish this information by no later than April 2018. They will also need to take into account bonus payments. This means their calculations need to include any bonuses paid between 1 May 2016 and 30 April 2017.
It is quite likely that publishing this information will embarrass many construction companies.
The fact that construction is a male-dominated industry and has struggled for quite some time to attract females to join is hardly front page news.
As Construction Manager reported in May, the number of women in construction has dropped by 17% in the last 10 years, compared to a 6.5% drop for all workers in the industry. In a speech in January 2015, government minister Nicky Morgan highlighted the fact that only 12% of the construction workforce were female, and that the UK had the lowest proportion of female engineers in Europe.
The gender pay gap in construction is reported by the government to be 22.8% – higher than the national average of 19%. Other surveys suggest the gap, particularly among older workers, may be much higher.
So, against that background, will a requirement to produce gender pay gap information on an annual basis
make any difference? There are grounds for believing that the answer is “yes”.
Businesses will be required to publish:
- an overall gender pay gap figure based on both mean and median average hourly pay;
- the number of men and women in each of four pay bands; and
- information on the gender bonus gap and information on the proportion of men and women who received a bonus in the same 12-month period.
The information must be published annually, starting no later than April 2018, and it must be publicly available.
What this will do for the first time is give accurate information from the larger employers in the construction industry on their overall gender pay gap, the gender pay gap related to bonuses and, finally, the proportion of men and women in the higher pay bands – probably highlighting that, for most businesses, men continue to dominate the higher pay bands.
Although there is no sanction for failure to comply, what is likely to happen is that businesses who do not comply will be named and shamed.
Those companies that do comply are likely to be the subject of comparisons in league tables that will be compiled by the press and interested parties. Where businesses want to attract the best talent, both male and female, it will be highly damaging to have their name featured at the bottom of such a league table, or alternatively in a table of businesses who have failed to comply with their obligation to report.
The legislation gives businesses the opportunity to publish a narrative to explain the gender pay gap figures. Internally within these businesses there will be an increased impetus to explain exactly what steps are being taken to address the problem. Boards will look to their HR departments for a year-on-year improvement in order to give them a “positive story”.
In summary, the advent of this legislation, despite the lack of formal sanctions, is likely to lead to greater transparency and increased accountability, leading to positive action to both encourage more women into construction and to reduce the pay gap.
Stuart Neilson is a partner and employment law expert at Pinsent Masons.