Page 1 Mind The Gender Pay Gap 11 December 2015 Gemma Johns, Senior Manager Simon Feeke, Senior Manager People Advisory Services Page 2 Aims of session Understand the context of gender pay reporting Share what we know so far about the requirements Consider some points to inform good practice Explain EYs internal approach Discuss how EY helps clients Questions 1 January 2014Presentation title Page 3 Context 2015 Equal Pay Day 9 th November Women will have to work until the age of 80 The mid-life pay crisis Short changed! Reasons include: Family responsibilities Segregation in the labour market Undervaluing of womens work Often hard to define 1 January 2014Presentation title Page 4 Compulsory gender pay gap reporting: whats coming in 2016? On 14th July 2015 the Government published a consultation entitled Closing the gender pay gap Focused on the Governments commitment to workplace equality and intention to implement regulations on gender pay gap reporting under Section 78 of the Equality Act 2010 The new regulations will make publishing gender pay discrepancies mandatory in England, Wales and Scotland for all companies with over 250 employees The Consultation posed questions on both the practical aspects of reporting regulations, and wider questions around what other actions the government could take to close the gender pay gap The outcome of the consultation will be published in winter 2015, with the new legislation expected to take effect 1 st half 2016. Page 5 What will the requirements be? Exact details are still unclear, however it is anticipated that regulations will include: Disclosure of a single overall gender gap between pay of male and female staff The reporting requirements will include information about bonuses, in addition to base pay Page 6 What are the implications of the new legislation? Welcome step towards putting gender and diversity & inclusiveness at the top of companies agenda However, it will also have significant implications that companies need to be ready for: Aggregated view of gender pay may not be a fair representation of underlying pay practices Reputational risk: poor gender pay gap may have an adverse impact on corporate brand Talent risk: impact on employee attraction, engagement & retention Litigation risk: risk of equal pay claims and grievances Financial risk: backdate equal pay claims up to 6 years, and a penalty for non- compliance of 5,000 Process risk: review & redesign of company policy & practices Page 7 Insights from EYs gender pay gap seminar EY research of c.70 clients to gather feedback on the consultation highlighted consistent themes: Organisations are already preparing for the change but are concerned about the potential requirements and reputational risks Employers need to focus on the underlying causes of gender pay gap to ensure this is not merely a compliance exercise Gender pay reporting will improve the gender pay gap, but will not necessarily address the underlying causes Gender pay gap requirements should align to company cycles An employee threshold of 250 employees is only appropriate for organisations with the infrastructure to report effectively The subjective nature of comparing like work may result in inaccurate findings and will require contextual explanation Page 8 What should you be doing? A journey of two phases: Phase 1: Reporting compliance Full details of the regulations are due to be published imminently, and focus will need to be on compliance with reporting requirements Organisations will require access to the correct data and sufficient resource in order to conduct this analysis, and report on the gap Keep abreast of government developments Review reporting requirements and understand the implications Prepare and validate data Undertake analysis (once the legislation has been published) and ensure compliance Consider the broader context and messaging Phase 2: Closing the gap Once the pay gap has been reported, focus must shift to determining the underlying causes for pay disparities What solutions can be put in place to close this gap? Undertake a diagnostic review on potential pay variation causes including: Review of policy & practices Review HR & reward strategy Review job evaluation methodology and pay frameworks Conduct an equal pay audit Identify solutions to help close the pay gap Focus of attention Actions Page 9 Key questions to consider How do you define your workforce? What pay are you including? Data capabilities? How reliable/accurate is your data? Are there areas of your business where the workforce is heavily dominated by a single gender? Are you prepared for communicating the results? How to move beyond compliance? 1 January 2014Presentation title Page 10 EYs internal approach 1. Dedicate resource, focus and accountabilities 2. Senior engagement 3. Seek industry good practice 4. Internal education 5. Going above and beyond 1 January 2014Presentation title Page 11 How we help our clients 1. Pay audits 2. Strategy 3. Continuous conscious culture change 1 January 2014Presentation title Page 12 Complex and fragmented EDI landscape UK National standard for EDI supported by industry and government Legal compliance and sector-specific best practice combined in to one standard Continually changing EDI legislative and regulatory requirements The standard incorporates the Equality Act 2010: All 9 protected characteristics Current legal obligations Gender pay audit (2016) Tailored to business needs with flexible time frames and no arbitrary deadlines No mechanism to drive long term sustainable EDI improvement Third party external assessment Best practice action planning Proportionality and relevance Fit for purpose The problem The solution The National Equality Standard 12 Page 13 Overview of the NES components 13 Page 14 = There is a need to focus on diversity holistically 2 = 3 1 = = Lack of appetite for risk and innovation What we have learnt Seeking input and evaluating impact is essential 5 = 4 What gets measured gets done 14 Lack of alignment between diversity ambitions and organisational strategy Consistent disconnect between leadership and middle management Page 15 Questions?