On 6 April 2017, mandatory gender pay reporting came into force in the UK. It applies to all companies with 250 employees or more. This is a particularly sensitive issue for the life sciences industry, which a 2016 report by Korn Ferry Hay found to have one of the largest gender pay gaps of all, alongside the technology and energy sectors.
In healthcare, research by the website 24/7WallStreet found that female doctors in the United States earn little more than 60% of the salary of their male counterparts, and it is likely that the equivalent figures for the UK are equally dramatic.
By 4 April 2018, companies will be required to report the size of their gender pay gap, as it was at 5 April 2017, and these reports will be made publicly available by the government, where they can be searched by anybody who is interested, including employees, job applicants, competitors and journalists.
However carefully employers try to pay men and women equally, large gender pay gaps are likely to be revealed. This is because the gender pay gap captures not only unequal pay, but also situations where there is a scarcity of women in highly paid senior management roles. There is likely to be reputational risk, especially for those businesses which have the worst figures.
And employers will have to be careful about how they explain these gaps. A study by McKinsey surveyed senior executives in the life sciences industry and found that, while 40% of male executives considered a shortage of available female candidates to be a plausible explanation, 0% of female executives agreed.
But there are also opportunities which arise from the new legislation. By understanding the scale of the problem, companies will be in a better position to devise strategies in order to address it. The reporting obligation will then become a chance to present a positive image to the world of the steps being taken to tackle the gender pay gap.
The employment team at Fieldfisher are actively involved in training companies on their legal obligations, assisting with data capture and reporting, and most importantly drafting the narrative to explain how companies will deal with any issues identified. In addition, the team have found open and transparent communications with employees and their representatives (whether Work Councils and/or unions) have helped companies get "buy in" on the topic.