Compulsory equal pay audits: Why they would have "little effect on the gender pay gap"

Consultant editor Darren Newman explains why he thinks strengthening the right to request flexible working would do far more to address the gender pay gap than legislating for compulsory equal pay audits.

I'm not a pay researcher; I'm an employment lawyer. So largely I try to stay out of the debate when there is a new "gender pay gap" survey. However, there is one recurring theme of these debates that I do feel qualified to address. Discussion of the gap between the average pay of men and women often begins with the observation that the gender pay gap persists despite the fact that it is now 40 years since the Equal Pay Act 1970 was passed (though it did not come into force until 1975). The implication is that the purpose of the Equal Pay Act 1970 was to create a situation in which the average pay of men and the average pay of women would be the same.

But that was never what the Act was about. The law on equal pay is about individuals, not groups. It prevents an employer from paying a woman less than a man for doing equal work, unless there is a genuine reason for the differential that is not tainted by sex discrimination. The "average" pay of men and women might be part of the background evidence in an equal pay claim, but it can never be the basis of the claim itself.

Nevertheless, fresh evidence of the persistence of the gender pay gap usually leads to calls for changes to the law on equal pay, generally in the shape of requiring employers to carry out equal pay audits. Before the last election, both the Conservative and Liberal Democrat manifestos pledged legislation on the issue, and it appears from the "Modern workplaces" consultation issued by the Department for Business, Innovation and Skills that it is the Conservative policy that is to be taken forward. The proposal is that an employer found to have discriminated in terms of pay should be obliged to carry out an equal pay audit. The obvious result of this would be that large employers will bend over backwards to settle any equal pay claim they face, because the cost of carrying out a full equal pay audit will easily outweigh the cost of any individual equal pay claim.

The law would also have to explain just what an equal pay audit actually is - and the parameters within which the employer should conduct it. This is more complicated than it might appear, because a key feature in any audit is an assessment of which roles within an organisation should be regarded as "equal". But what makes one person's work "equal" to that of another? How do we know if the work of an HR director, for example, is equal to that of a finance director? How do we compare the work of a cleaner with that of a hospital porter? Under the Equality Act 2010, if the work is not actually the same, it can be either "rated as equivalent" or found to be of "equal value". Either approach essentially depends on a detailed analysis of the roles under scrutiny in terms of the demands that each role places on the employee concerned. Often that leads to a complicated scoring system under a wide range of criteria that is so complex and structured that it can look for all the world as though it is a scientific appraisal of whether or not one job is equal to another.

However, the truth is that any analysis of the value of work is subjective, involving value judgments about what aspects of a job should be most highly rewarded. Is a job involving heavy manual labour more demanding than a job managing difficult people? Should jobs that require academic ability be paid more than jobs that require physical strength or stamina? There is no way of conducting a job evaluation exercise, whether as part of an overall equal pay audit, or as part of a pay restructuring exercise, without subjective judgments about the work being done creeping into the equation. This creates the risk that the audit will simply reinforce any inequality that is already lurking within the pay system.

The fact is that any law on equal pay audits will create a lot of work for consultants, but will have little, if any, effect on the gender pay gap. To address that, we have to look deeper to see why women are, on average, paid less than men.

There is no doubt that a significant contributing factor to the gender pay gap is that women are concentrated in jobs that have been ascribed a lower value than those more frequently done by men. But are women choosing to do low-value work, or do we just undervalue the work that women choose to do? Are the differences in careers that we see between men and women the result of genuine choices and preferences, or is the system working in such a way as to prevent women from choosing the work that attracts higher rates of pay? Could it be that, on average, women are less interested in pursuing higher pay than men, and more likely to focus on job satisfaction? These are big questions, and there is no point in looking to employment law for the answers.

However, there is one area of employment law that has the potential to have a significant impact on the issue: the right to request flexible working. Many women are held back in lower-paid jobs because their childcare commitments prevent them from working full time, but their employer is unable or unwilling to offer flexible working options at a senior level. Often it is felt that a leadership role requires a full-time presence, or at least an ability to be available for long and unsocial hours when needed. As a result, women are held back in lower-paid jobs when they could otherwise have gone on to more senior, better-paid, positions. However, if more women returning from maternity leave, or with young children, were able to work flexibly and still progress in the organisation, that would do more to address the gender pay gap than any number of equal pay audits.

The right to request flexible working is currently a very "light touch" regulation, although it is backed up by potential claims for indirect discrimination based on the fact that many more women than men need to work on a flexible basis. The "Modern workplaces" consultation proposes simplifying the right to request procedure. However, if the Government really wants to close the gender pay gap, it could look at strengthening the law, so that requests for flexible working can be refused only where the employer can show that the refusal is objectively justified. Such a move would also simplify the law, because it would avoid many of the complications that claimants currently face in establishing indirect discrimination, and could well encourage a culture shift towards accommodating flexible working practices within senior and professional roles. Of course the gender pay gap would not go away, and the truth is that it may never. But there are better ways to improve equality in the workplace than to legislate for gender pay audits.

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