February 17, 2016 Closing the pay gap
Followers of our website will know that the subject of diversity appears regularly within our news pieces. Indeed, our last article highlighted the importance of diversity within the boardroom in order to help to ensure a balanced and proactive leadership. Since that article was published, two further diversity -related items have come to the fore.
The first is a BIS consultation in respect of the UK’s implementation of the EU Directive on disclosure of non-financial and diversity information. Here, the requirements in respect of diversity will include the publishing of a company’s diversity policy covering aspects such as age, gender, educational and professional backgrounds as well as the provision of information on how the diversity policy has been implemented within the reporting period.
Other areas covered by the consultation include environmental, social, employee, human rights, anti-corruption and bribery policies. Although the proposals largely reflect the UK’s existing reporting framework, BIS is asking for feedback on the UK plans to transpose the directive into law as well as exploring whether there is a desire for wider reforms to the scope of narrative reporting by UK companies. Comments are sought by 15thApril 2016 both from those who prepare and those who use financial reports.
Elsewhere, the government has announced a move towards compulsory publishing of pay gap information. ONS figures for April 2015 revealed a pay gap for full-time workers of 9.4%, rising to 19.2% when part-time workers are taken into consideration; little changed on the previous year. In response to this the government’s Women and Equalities Minister, Nicky Morgan, has now announced that with effect from April 2017 companies employing more than 250 staff will have to start calculating pay gap information, with results being published a year later. Bonuses, long a point of contention when it comes to accusations of unequal pay, will have to be included in the calculations; whilst reporting metrics will drill down into areas such as seniority and differing income levels.
Commenting on the announcements Nicky Morgan said “In recent years, we’ve seen the best employers make ground-breaking strides in tackling gender inequality. But the job won’t be complete until we see the talents of women and men recognised equally and fairly in every workplace.”
Women now account for 60% of junior managers but just 20% of senior managers and although female representation at boardroom level has increased over recent years there is still some way to go. However, diversity is not and should not be simply seen as a gender issue. Diversity of age and ethnicity, of background and experience will all help to ensure that a company and its leaders are in a strong position to best represent and deliver to its customers and the wider society.