Photographer: Simon Dawson/Bloomberg

Now’s the Perfect Time for Women in the U.K. to Demand a Raise

  • New rules force employers to report male-female pay difference
  • Companies move to address discrepancies ahead of disclosure

For women in the U.K., there’s never been a better time to ask for a raise.

Company bosses are rushing to get their houses in order ahead of new rules forcing them to publish pay disparities between men and women -- and that means female workers have a bit more leverage in the quest for equal incomes and promotions.

The British government said in February that it would require some 8,000 companies with 250 employees or more to disclose differences in salaries and bonuses for male and female workers. Now executives are poring over spreadsheets to pinpoint inequities in their ranks, and some say they’re moving to address any gaps they find.

“I’ve seen for myself the power of being forced to report something,” said Dido Harding, chief executive officer of TalkTalk Telecom Group Plc. “My business and lots of others will be looking at the data now and saying: ‘What are we doing about it? We’ve got to get prepared.’ ”

The rules were drawn up under the government of former Prime Minister David Cameron. Theresa May, the second woman to hold that office in the U.K., has made the push for equality a key plank for her new administration and vowed when she took over in July to fight against the “burning injustice” that means “if you’re a woman you will earn less than a man.”

Women on average earn 19.1 percent less than men in Britain, according to a government report last year. In the finance industry, the gap is 40 percent. Even with the new rule, which would apply to non-U.K. women working at British companies, that gulf won’t close overnight across the whole economy, executives say.

Carolyn Fairbairn, the director general of the Confederation of British Industry, a business lobby group, has warned the government against “naming and shaming” firms, but the U.K. is following in the footsteps of other European countries such as France and Austria that already require companies to compile pay-gap data.

U.K. companies don’t have to release the numbers until April 2018, but preliminary guidelines require them to to report any bonuses paid from April 2016, and a snapshot of pay in April 2017. In addition to reporting on discrepancies in average and median compensation, employers must disclose the number of women and men in each of four pay levels in an effort to identify barriers to equality. The government is expected to compile the figures on a searchable database, leading to the prospect of companies being ranked based on their pay gaps.

For some executives, the reporting requirement has kicked up statistics that are both a relief and a call to action.

“I had imagined there would be a bigger gap in the way we’ve been operating but there isn’t,” said Gavin Patterson, CEO of BT Group Plc. “Where there are gaps, we’re looking to address them now, before any formal reporting. But the gaps tend to be on an individual basis.”

Uneven Distribution

Even when men and women receive equal pay for equal work, the often lumpy spread of women across the corporate hierarchy can cause companies to worry about their average figures. In some cases, there might be plenty of women at the top but not enough women in middle management, leading to overall pay discrepancies.

"We’re really good at gender balance at Virgin Money except for the team of people who report to my direct reports, where there are 80 percent men,” said Jayne-Anne Gadhia, CEO of retail bank Virgin Money Holdings U.K. Plc. “We’re having to really push that to get to 50-50 and once we’ve got that our gender pay gap is much more resolved than it is today.”

Alison Brittain, CEO of Whitbread Plc, which owns the Costa Coffee and Premier Inn chains, said the reporting requirements are encouraging companies to step up efforts to even out the male-female balance.

“It is likely that more companies will have gender-mix differences within grades or differences in gender mix between part-time and full-time work,” Brittain said. “This isn’t a pay issue per se, but it does need to be tackled by taking actions around the way you promote and bring people on through the organization.”

A few companies were already publishing pay-gap figures in advance of the requirement. Tesco Plc, the U.K.’s biggest retailer, said its discrepancy was less than 1 percent in 2014-15.

Financial services and law firms are expected to look the worst under the disclosure rules, said Ed Stacey, a partner at PricewaterhouseCoopers who heads the consultancy’s employment team.

“The companies that will do badly will tend to be those employing, say, 1,000 people, like law firms where you have a lot of personal assistants who are paid less money and partners who may be paid significant multiples,’’ he said.

Stacey said he’s advising companies to take small steps to redress imbalances, such as paying fixed bonuses rather than basing year-end rewards on a percentage of salaries -- a policy that can reward highly paid men more than other workers.

Companies that discover a pay gap may not be able to afford to close it by simply raising some women’s salaries, said Lorraine Heard, legal director at law firm Bond Dickinson, who advises large firms on employment issues. But some employers are worried they may face lawsuits if they don’t act before the numbers are published.

“If they stand out as having a poor gender-pay gap compared to others, they will be more likely to be challenged,” she said. “This has the capacity to paint organizations in a bad light.”

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