Jayne Harrison: The legal implications of avoiding the construction gender pay gap
Employment lawyer Jayne Harrison discusses the steps that construction employers can take to increase transparency in their efforts to tackle the gender pay gap.
In the last few months, we have seen the Women in Construction Summit alongside European Women in Construction and Engineering. A year into gender pay gap reporting, there has been plenty of discussions and accusations over the lack of advances that have been made in closing the gap. So where does this leave the industry now? According to Building, women in the top construction firms are paid on average 72p for every £1 that men earn, with more than half of contractors failing to close their individual pay gap overall.
This guide discusses the legal implications of not publishing your gender pay gap report; the legal rights of a female employee that feels like she has been prevented from promotion or pay rises due to her gender; and actionable advice that employers in the construction industry can take to reduce the gap. We also spoke to Jonathan Rennie, partner at UK law firm TLT in Glasgow, for his insights.
What are the legal implications of not publishing your company’s gender pay gap report?
It could be tempting for businesses to not publish their gender pay gap report in fear that it might cause controversy and lower employee morale. The temptation might be even greater for construction businesses, who might fear that their lack of progress in closing the gap could be met with contention. However, it is a legal requirement for employers with 250 or more employees to publish their gender pay gap report.
Failing to report on your company’s gender pay gap within one year of the ‘snapshot date’ is unlawful. A ‘snapshot date’ is the date used to calculate your businesses’ gender pay gap figures. The snapshot dates as set by the government are as follows:
- 31st March for public sector organisations
- 5th April for businesses and charities
It is important for businesses within the construction industry to remember that the Equality of Human Rights Commission in Scotland has the power to enforce a series of regulations if they do not report on their gender pay gap, or publish inaccurate data. If a business does not comply with the EHRCS’s correspondence, the EHRCS will investigate into whether or not the organisation has committed an unlawful act. If a business continues to resist complying, they could be liable to pay a ‘level 5’ fine, meaning that there would be no maximum limit to the amount.
Jonathan Rennie notes that there is not much evidence that the enforcement powers are being deployed currently but that may change as the Regulations evolve and develop. Rennie advised further that employers need to be mindful that the EHRCS may choose to make an example of an employer where they are non-compliant with gender pay reporting.
Do female employees have the right to take legal action against their employers?
If a female employee believes they have been treated less favourably by their employer for a pay rise or promotion, it is important to remember that they have the right to take legal action. A female employee can make a claim of direct sex discrimination under the Equality Act 2010 if she has sufficient evidence to say that she has been discriminated against for her gender (this is also known as a prima facie case of discrimination). If a female employee was denied an automatic pay progression, then she may be able to mount a claim under the Equal Pay Act 2010.
However, Jonathan Rennie of TLT advised that gender pay gap reporting is based on average pay across quartiles, therefore might be too general to impact individual discrimination claims. Gender pay gap reporting may be introduced as evidence of pay inequality, but it is not determinative of discrimination claims where there may be other explanations for pay differences. Therefore, further evidence would be required from a female employee to prove that they have been prevented from promotion.
The steps to take if your company is in the midst of a gender pay gap controversy
Given the high profile nature of the gender pay gap in the construction industry, it is unlikely to be forgotten by the media or concerned employees any time soon. If your company is in the midst of a gender pay gap controversy, it is important to not ignore the problem and hope it goes away. Given the lack of progress by the industry as a whole, employers need to recognise that public opinion is already against them.
Companies should address their employees regarding the issue as soon as possible; whether that be through a company-wide meeting or email. They should communicate that management understand the situation at hand and define the “action plan” in place that aims to reduce the gender pay gap in their workforce. Employers should also consider writing a formal statement, signed off by the MD or CEO, that both addresses the gender pay gap and informs the press that they are working to reduce it.
The Advisory, Conciliation and Arbitration Service (ACAS) encourages employers to go beyond the requirements of gender pay gap reporting. Using the toolkit provided by the Government Equalities Office (GEO), employers should consider the below points to reduce the pay gap and improve the recruitment and progression of women in the industry:
- Review policies and procedures to ensure you have transparent policies and criteria for promotion, pay and reward processes
- Appoint a diversity manager or diversity task force to monitor the processes for recruitment and promotion
- Encourage salary negotiation by publishing a salary range for each job and stating clearly if it is negotiable.
Jonathan Rennie notes that some enlightened construction firms have used gender pay gap reporting to positively focus on recruiting female graduates into the industry such as Costain. By using roadshows and social media to promote the industry and attract female talent, the firms can hopefully be represented at senior levels in the future and help reduce pay disparity. This approach can be a positive differentiator in the war on talent.
The above recommendations are just some of the ‘effective actions’ in the toolkit that have been tested in real-world settings and found to have a positive impact. The GEO also shares ‘promising actions’ that require further research to improve the evidence on their effectiveness and how to implement them, and ‘actions with mixed results’ that have shown to have both a positive or negative impact in different situations. It is recommended that construction organisations review their action plans against this toolkit to verify their effectiveness in closing the gender pay gap.
- Jayne Harrison is the head of employment law and partner at Richard Nelson LLP