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Mind the gap - gender pay gap reporting for retailers

Posted: 23/03/2018

Retailers with 250 or more employees have less than two weeks left to publish their gender pay gap reports.

The gender pay gap is the difference in average pay between all men and women in a workforce regardless of their position in the company.

By 5 April 2018, employers who are in scope for the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, should have published: 

  • the overall gender pay gap figures for relevant employees, using both the mean and median hourly pay rate;
  • the proportion of men and women in each of four pay bands (the quartiles);
  • the mean and the median gender bonus gap (the difference between men and women’s bonuses) paid over a 12 month period; and
  • the proportion of men and women receiving a bonus over a 12 month period. 

These figures should all be based on data gathered from the snap shot date of 5 April 2017. 

According to the Office for National Statistics, the gender pay gap (for median earnings) for full time employees across all sectors for 2016/2017 was 9.4%. And for retailers, where women make up 60% of the workforce but only 10% of the executive boards, it is widely anticipated that the gender pay gap data will make for uncomfortable reading.

For those retailers that have already published their reports, the results have been mixed. High street fashion stores Phase Eight and New Look hit the headlines in January as their reports revealed that median hourly pay for women is 54.5% and 20.9% lower than male employees respectively.

Phase Eight is the biggest published gender pay gap so far. The retailer defended the disparity in pay by saying the staff in their stores are overwhelmingly female, whilst their corporate head office staff (whose pay rates are typically higher) are more evenly split between men and women. Further reports from the likes of John Lewis and Marks & Spencer show a lower median hourly rate of 7.8% and 3.3% respectively compared to males. 

It is expected that most retailers are likely to have a gender pay gap. However, this does not necessarily mean that they have acted inappropriately or in a discriminatory way. There are, of course, factors which affect the gender pay gap figure, such as part-time working and London weighting. However, it has been suggested that the biggest single cause of the gender pay gap in the sector is the comparative lack of women occupying senior roles, and the requirement publicly to report is a step in the right direction in addressing these inequalities.

When publishing their reports, retailers have the option to include a narrative explaining any pay gaps and the measures to address any diversity issues. Taking this approach might also help tackle any negative media scrutiny. However, gender pay gap reporting is not only about the external profile. Retailers are encouraged to think carefully about the internal message to their employees and whether this will be delivered (together with a strategy for tackling the gap) before the figures are released for general consumption.

For those retailers that have already published, the focus will now be shifting to gathering and analysing the data for their 2018/2019 reports to understand what, if any, progress has been made to close the gaps since this year’s report and how this can be presented without being misleading. Whilst the media focus on retailers has been relatively muted for the first year of the new rules, we anticipate that the stakes will rise for those whose pay gaps remain static or worsen for 2019.

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP