Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/603117
22 | 20TH - 26TH NOVEMBER 2015 | UTILITY WEEK Operations & Assets Market view W hen Lord Davies published his five-year review of the number of women on boards last month, he took the opportunity to stress the suc- cess of the voluntary approach to diversity in increasing the representation of women on FTSE 100 boards. Those companies have increased the proportion of their female board members from 12.5 per cent in 2011 to 26.1 per cent in October 2015. Looking at the utilities sector specifically, almost all com- panies in the industry listed in the FTSE 350 have achieved the 25 per cent target. The Women on Boards Davies Review pro- poses that the voluntary target be increased to 33 per cent and also recommends a further formal review be conducted to consider the executive talent pipeline. The latter recom- mendation was immediately accepted by equalities minister Nicky Morgan. The voluntary approach to addressing the persistent gender pay gap in the UK has been less successful. The 2011 "Think, Act, Report" initiative was intended to encourage larger employers to report gender pay gaps within their organisations and to take steps to address them. Of the 260 companies that signed up, fewer than ten actually published their data. In light of the failure of the voluntary approach, the government undertook a con- sultation this summer on compulsory gender pay gap reporting for those employers with more than 250 employees. One of the issues the government sought views on was the level of detail to be reported by individual companies. The consultation closed in Sep- tember and we are awaiting dra regulations that will set out what has to be reported, in what level of detail, where and how oen. Last month, prime minister David Cam- eron announced that, as well as data on basic wage, larger employers will be required to provide information about bonuses for men and women. This is interesting because it provides an indication the government intends to require employers to provide more detail on the make-up of pay than many had originally thought. There is a gender pay gap across most sectors in the UK. The average pay gap is 19.7 per cent when part-time workers are included in the calculations. The causes of the gap are disputed and include complex historical, social and economic factors. It is clear, therefore, that when the data is col- lated for publication, many organisations will find their data also discloses a pay gap. Such a gap does not mean that the employer has breached any equal pay laws but it does put the spotlight firmly on pay. Many employers are under the misappre- hension that provided they pay the same rate for the same role, regardless of gender, they will not face claims for equal pay. Because men generally outnumber women in the utility sector, one may think there is limited opportunity for equal pay claims. Aer all, in the energy sector men make up 81 per cent of the workforce as opposed to 54 per cent of the general workforce, and men and women are concentrated in different roles (for exam- ple, 88 per cent of production, plant and machine operators are male, 75 per cent of those in administration roles are female). However, it is not just employees doing the same job who are entitled to equal pay but also those working for the same employer in very different roles, but where these roles are equal in terms of skills and demand. That means that an office-based finance manager could compare themselves and their pay with a site-based engineer, and if their roles were of equal value, then unless the employer could demonstrate it had a reason for the difference in pay, they would be entitled to be paid equally. Demonstrat- ing the reason for differences in pay can be difficult, particularly if employees have been acquired through a contracting process or where pay arrangements are long-standing and the records that explain pay systems have been lost. Pay gap data could be used to support equal pay claims. We do not yet have the detail of the regu- lations, and it is likely that once they are published employers will be given a period of time to prepare for publication. The extent of preparation required will depend on the circumstances and the nature of the business. In some cases, organisations with transparent pay structures may consider that spot-checks are sufficient. Others with less transparent pay systems, or which operate across different parts of the utilities sector, may want to consider gender pay audits. Care needs to be taken not to create unhelpful documentation as part of the audit process because it might later be discover- able in litigation. Documentation created for the purposes of taking legal advice can- not generally be used in later litigation, so it would be sensible to involve legal advisers in key parts of the audit process so as to benefit from this protection. Annelise Tracy Phillips, senior associate at law firm Burges Salmon It's still a man's world Despite years of equality legislation, women still lag behind their male counterparts on pay in many workplaces. Make sure yours isn't one of them, says Annelise Tracy Phillips. Source: Women on Boards Davies