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Bonus statistics are further blow to working women

By Principal Lawyer, Employment Law

Women face not just a ‘glass ceiling’ but the glass is also half empty when it comes to bonus pay. The latest Chartered Management Institutes statistics reveal men, on average, earn 50% more bonus pay than women.

The glass analogy is something of a misnomer: Glass is transparent; pay is not.  

The statistics do not surprise me. The gender pay gap has been prevalent for years, especially in the City. Last week a managing partner at a major UK HR/IT company told me her male peer received £15,000 more in this year’s bonus. The company’s response –“it was the CEO’s prerogative”. This highlights one of key the difficulties with tackling pay inequality and Bonus Disputes, in addition to secrecy generally, that bonus pay is typically discretionary. It is commonly at the gift of a senior manager/CEO and often perceived as career suicide to challenge. If you are ambitious and doing well, you won’t want to risk being seen as taking a stand against the business, or being disloyal.

Clearly, a cultural shift is required to lift this taboo. But this has been against the law for 40 years now. So what will bring about that change? In 2011, the government promised to promote equal pay to end discrimination in the workplace and Equal Pay Disputes. They have introduced legislation purporting to ban pay secrecy in employment Contracts and requiring certain businesses to undertake equal pay auditing, and have initiated Think, Act, Report.

I’m all for measures to prevent pay gagging, although the law falls short of actually making these clauses illegal, so again we see government actions almost entirely without teeth and these recent statistics clearly show that discrimination is still rife. The new equal pay auditing only applies to businesses that have broken equal pay laws. It does not take much to realise that this does not help women generally who know very little about their colleagues pay, or who know they are getting paid less than men, but are deterred from raising alarm bells (unless they are employed by that particular company). 

Mandatory equal pay auditing for all large businesses would bring about a cultural shift more radically. Think, Act, Report is a mechanism for bringing about cultural change, but participation is voluntary and uptake has been slow. New legislation has also been passed which is set to remove the requirement for employers to respond to equality questionnaires (asking questions about discrimination), so it seems the government is going backwards not forwards here.  

Let’s face facts: industry hasn’t chosen to stop polluting our environment because they feel worthy. Instead domestic and international law has led change. This is what needs to happen in relation to pay, in a way that other countries have approached this:

  • In the USA, for example, the courts permit class-actions on behalf of all women in an organisation on an opt-out basis, and legal costs are easily recouped. In the UK in contrast, claims are pursued on a more individual basis, perpetuating the personal-nature of the complaint, the process is slow and expensive and you don’t typically recover costs. 
  • Another change leader is Norway, with a number of equality initiatives, including its legal quota for women on boards. Germany is set to follow this lead. There is no UK equivalent despite women making up just 17.5% FTSE 100 directors.  

The government’s so-called “red-tape challenge” should focus on lifting obstacles which prevent both sides of business succeeding. To go back to the glass analogy, the latest statistics suggest we are really blowing it…