The impact of the equality debate on benefits

Gender bias is still apparent in many organisations, but it is in employers’ interests to work towards creating a level playing field, says Jenny Keefe.

One of the latest exports to cross the pond from the US to the UK is, a website on which employees can publish their salary details and spill the beans on their employers anonymously. Salacious, gossipy and an HR manager’s nightmare, can make disconcerting reading for some organisations.

A scan through employees’ tales of woe soon nails the myth that today’s workplaces are fair and equal. For example, potential female recruits might think twice about forwarding their CVs to an aerospace company described as “very boys’ club”. Neither will they be queuing up to join the accountancy firm where “women who have babies don’t last long because management isn’t flexible”.

Narmadha Thiranagama, a policy officer at the Trades Union Congress (TUC), says there is still a gender gap in many UK workplaces. “Equality schemes have the potential to improve workplaces, but much work remains to be done, particularly in ensuring they are championed from the top and targets are monitored and reviewed,” she says.

The number of claims lodged with employment tribunals relating to equal pay more than doubled in the last financial year, according to the Advisory, Conciliation and Arbitration Service (Acas). In the 2007-08 financial year, the number of claims relating to equal pay reached 58,500, making it the most common cause for complaint, overtaking unfair dismissal for the first time.

This year also has seen several high-profile court rulings on the subject of equal pay that could pave the way for even more claims. In the cases of Redcar and Cleveland Borough Council v Bainbridge and others, and Middlesbrough Borough Council v Surtees and others, the Court of Appeal ruled that equal pay schemes offering transitional pay protection to higher-paid, often male, workers were unlawful. This means thousands of low-paid women working in the public sector are entitled to pursue claims for extra money.

According to the Chartered Management Institute and Celere’s 35th National management salary survey, published last month, the average female employee’s take-home pay at executive level is £13,655 less than their male counterpart. There are signs that this may be beginning to change, as earnings of female executives increased by 6.8% over the last 12 months, while the equivalent male earnings rose at the lower rate of 6.6%. But, even if this continues, the survey estimates that, at these rates, women will have to wait 187 years before their take-home pay equals that of men.

Playing fair on pay makes good business sense, says Alison Maitland, co-author of Why Women Mean Business. “Do organisations really want to miss out on more than half the talent pool, the majority of the market and a boost to the bottom line? Employers need to stop treating gender as a women’s issue or a problem for women to solve. Gender is a bottom-line issue,” she says.

This can affect employers’ ability to recruit and keep the best talent because pay is one of the most important factors in retaining top staff. Peninah Thomson, a partner at executive coaching firm Praesta, says: “Some FTSE-100 companies are facing attrition rates of in excess of 40%, and the loss of investment when a trained and experienced female executive decides to leave is significant.”

But, despite the arguments for fairness, many employers are still dragging their feet over equal pay. Making equal pay audits compulsory could give them a shove in the right direction. Progressive organisations already conduct pay audits, while others may soon have to follow suit. The Equalities Bill, to be drafted this autumn, will oblige public-sector employers to publish statistics on their gender pay gaps. The legislation could also extend this requirement to the private sector.

But Matt Waller, chief executive officer at Benefex, questions whether audits will curb inequality. “In practice, this just creates a huge administrative burden and does not solve the underlying problem. People will still be able to argue that what appears to be discrimination is, in fact, performance-related pay,” he says.

When choosing an employer, many women look beyond pay. They are often still taking the lead role in raising a family, so work-life balance is an important consideration. David Fairhurst, chief people officer at McDonald’s, says it is vital to accommodate employees’ differing needs. “Some workers choose to stay with us for long-term careers, while others take jobs because of our flexible approach to shift work. This allows them to spend time with their families or pursue their education. For example, parents can work during school hours in term time, but can take time off to coincide with school holidays.”

Employers must also ensure inequalities in pay and benefits do not arise around disability. Carers who juggle careers with looking after a disabled relative now have greater protection, thanks to a European Court of Justice ruling in July. In the case of Attridge Law v Coleman, legal secretary Sharon Coleman, the single parent of a disabled five-year-old son, claimed her employer forced her to take voluntary redundancy after refusing to give her the same flexible working rights as colleagues with non-disabled children. The court decided this was prohibited by the European Equal Treatment Framework Directive. Pauline McArdle, a partner at law firm Denton Wilde Sapte, says: “This case is likely to have a significant impact on employers because it widens the protection available under the Disability Discrimination Act.”

Yet there is a costly downside to flexible working for staff, according to Judith Glover, professor of employment studies at Roehampton University. “The main type of flexible working is part-time working. With some exceptions, it is low-paid, lacks career prospects, lacks access to pension schemes and is not associated with senior positions. Therefore the long-term effects of opting for this type of work are likely to be unwelcome: low job satisfaction, reduced earnings over a lifetime and poor occupational pensions.

“If there is an imbalance in terms of who does what in the home, it could be that opting for reduced hours improves women’s quality of life. The only long-term solution is for women and men to equalise the domestic division of labour and for all workers to work shorter hours,” she says.

Paternal leave
Forthcoming plans for additional paternity leave and pay may help to balance the difference when these come into effect at the end of this parliament. This will give mothers the option of transferring up to six months’ unused leave to fathers. Men who take this option will typically be paid at the lower statutory rate. “The pay position is likely to influence how many men will take up the new rights. It seems unlikely a significant number of men will take time off for childcare unless they are paid at a higher rate than the current statutory entitlement,” says McArdle.

Taking time out to raise families can also harm womens’ retirement prospects. Mothers who take career breaks or work part-time often do not put enough money aside to build up an adequate pension. A July 2007 survey by Prudential, Women are the pensions underclass, found women saved an average of £236.54 a month towards their pension, compared with men’s £304.56. This works out at a huge £42,600 less over a lifetime.

The TUC’s Thiranagama says: “Inequalities in occupational pensions are a reflection of wider inequalities at work. The key to [solving this] is more equality between men and women during the whole of their working lives. Good employers that want to do more than the minimum can help by continuing contributions through maternity leave, offering a real choice about retirement, and making it easy for women to save more.”

Inequalities in pay and benefits are not just gender specific, they also exist between agency workers and permanent staff. However, in May the government agreed a deal with the Trades Union Congress and Confederation of British Industry, which gives agency workers the right to equal treatment after 12 weeks in a job.

When it comes to remaining inequalities, many employers strive to level the playing field. Amanda Shrimpton, head of employee relations at Capgemini, which ranked twelfth in The Times’ Top 50 places where women want to work, says: “We work hard to ensure reduced hours are not a barrier to promotion, pay rises or bonuses. Pay rises are reviewed within the diversity aspects we record — one is gender.”

The HR manager at another company can also sleep soundly. A reviewer praises it as “a truly women-friendly organisation: a lot of benefits are given to women and a lot of initiatives are taken to bring forth female employees”.