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Comment: Gender pay reporting and getting the house in order

Multichannel retailers are grappling with a complex HR and employment law landscape, and their innovative business models can sometimes clash with the regulatory demands as they seek to come up with new ways to do business and increase productivity. The growth of the 'gig economy' for retail deliveries, robotics in logistics facilities and upskilling 'traditional' retail staff to cope with digital demands have all been pitfalls which need careful navigation.

The forthcoming obligation to carry out gender pay gap reporting is, though, one of the key challenges coming down the track for large retailers – both online and offline – but one which can be prepared for.

The new rules will require all businesses employing more than 250 workers to publish statistics showing the difference between the average hourly pay of male and female employees, the numbers of male and female employees falling within quartile pay bands, and information about bonuses paid to men and women.

Publication of the final regulations has been delayed until this autumn, but businesses would be unwise to sit back in the meantime. They will need to make the first assessment of their pay data in April 2017, with the deadline for their first report falling a year later. The government appears unlikely to push back these dates, so the timeframe is fairly tight.

However, there is plenty that can be done pending the final regulations. Helpfully, the government has given some clues about what to expect in a consultation published in August about reporting requirements in the public sector (which will mirror the private sector regime). Although this does not tell us everything, we now know what some of the key terms in the regulations will mean:

The statistics that must be published are very broad, which may lead to misleading impressions. One issue for some retailers is a demographic one. If their customer service or live-chat workers are mostly female and their senior managers mostly male, there is likely to be a significant gender pay gap even if there is no disparity between men’s and women’s pay in the same roles. Although this might suggest other types of discrimination, it seems there would be no pay discrimination occurring. 

Placing figures in proper context will be crucial and some eCommerce businesses may want to explain what their data shows by publishing analysis above and beyond what is required by the regulations. They may also want to talk about what measures they are taking to address any overall pay gap, such as helping more women into management roles.    

Many retailers will find it helpful to carry out a "dry run" analysis on their April 2016 pay data (or perhaps another month) to see how the numbers come out. The process of extracting the relevant data from the payroll system in a form that can be analysed may prove more complicated than expected, so it would be useful to work out how to do that now in advance of the regulations coming into force. If an employer’s dry run statistics do not make for pretty reading, it will at least have some time before next April to make sense of the data and take steps to improve the numbers or put them into context.

Retailers should also look out for the outcome of an equal pay case brought against Asda by over 7,000 store workers. They are claiming that they should be paid the same higher rate as the company’s distribution depot workers, who are mainly men. The employment tribunal’s decision is expected sometime this autumn and could have far-reaching implications; particularly for retailers whose expansion into internet sales necessitates even greater emphasis on the logistics operations.

Organisations unsure or unclear about how to get to grips with their pay structures, obligations and possible solutions should consider seeking specialist employment law advice, which can normally be done under the protection of legal privilege. Pay inequality will, after all, continue to generate headlines and the retail sector is likely to be a particular focus of media attention. Failure by retailers to get on top of any pay disparities now could lead to adverse publicity, equal pay claims from employees and lost customers. Conversely, brands that are well prepared and able to explain their data can emerge with credibility.

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Lewis Silkin LLP

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