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Wednesday, September 11, 2013

Gender inequality surrounding U.K. bonuses: What can you do about It?

Pay disclosure can be obtained via equality questionnaries or grievance complaints
Pay secrecy is likely to become illegal
By Josephine Van Lierop

Women do not just face a ‘glass ceiling’ in the workplace. Their glass also tends to be half empty when it comes to pay and bonuses.

The Chartered Management Institutes statistics reveal men in the UK earn nearly £3,500 more than women in average bonus pay, approximately 50% more. The glass analogy is something of a misnomer here: Glass is transparent; Pay, and the culture around it, is not. At least, not yet.

The statistics do not surprise me; this is no rumour. The gender pay gap in the UK has been prevalent for years, even more so in the City. We routinely see female clients that believe that they have been denied bonus or received a lower bonus than colleagues. Last week a good female friend of mine and managing partner at a major UK HR/IT company told me her male peer received £15,000 more than her in bonus this year. The company’s response was “it’s the CEO’s prerogative”. This highlights the difficulties, in practice, of achieving change. Secrecy coupled with fear of challenging your employer.

Your rights partly depend on your contract terms. Guaranteed bonuses are treated differently to discretionary bonuses. Where bonuses are guaranteed or formulaic they may be more transparent and easier to challenge. But where discretionary, it can be difficult to identify what others have been paid and it is commonly the decision of a senior manager/CEO which will need to be challenged.

Pay secrecy

Pay secrecy is also a problem because of the way pay legislation typically operates. To bring an equal pay or sex discrimination claim you have to identify a male colleague (or a hypothetical one), who has been paid more favourably. This is problematic in the competitive environment in the City, where peers may be protective of their own interests and unlikely to assist you to ‘rock the boat’ if they might be seen as causing trouble.

The UK government’s response to pay secrecy in 2010 was to restrict gagging. If your employer tries to enforce confidentiality or discipline you for discussing pay, that is now likely to be illegal. However, culturally, people are often embarrassed to discuss pay; it is a taboo, or it is considered rude to ask. A cultural shift needs to occur before pay becomes something that is openly discussed over morning coffee or at the water cooler.

In my view, mandatory equal pay reporting is necessary to break down inequality. Unfortunately the changes due to be implemented this year in the UK, requiring certain companies to undertake equal pay audits, will only apply to businesses who have already broken equality laws and so in my view will achieve little in tackling the problem.

What to do

If you suspect that you are paid less or received a lower bonus than male peers, at the moment you can ask your UK employer direct by way of an Equality Questionnaire. Employers generally answer questionnaires, but if they don’t, again there is little that can be done. If you go on to bring a claim, at best the Employment Tribunal can rely on this to draw an inference of discrimination. Further, the current government has decided to remove the questionnaire right for employees altogether, the change taking effect on an, as yet, unspecified date soon.

Another means to obtain pay information is to make a grievance/complaint to your employer; which requires them to investigate and report, however, this complaint-driven process can expose and negatively brand individuals. There is a cultural perception (perhaps more prevalent in the UK and commonwealth than the US), where raising a complaint is seen as disloyal, a challenge against authority, and is taken very personally. Women even talk of “career-suicide” as one of the fears of raising a legitimate complaint.

Bonus and pay inequality amongst the sexes is by no means just a UK problem. The USA has had gender equality laws in place for a similar time frame, but still faces a gender pay gap. However, the British cultural hesitance towards enforcing rights is generally much less prevalent, and there are better mechanisms in place in the US system to reinforce that more open culture. The US courts also permit large scale class-actions on behalf of all women in an organisation on an opt-out basis, and costs are more easily recouped, as well as the potential for punitive damages awards (which are not available in the UK).

In the UK, claims are pursued on a more individual basis, perpetuating the personal-nature of the complaint and acting as a practical deterrent to individuals facing discrimination, who wish to do something about it.

Ultimately, pay transparency and improved enforcement mechanisms are needed, on top of a shift of attitudes around pay inequality to at last achieve change in this area. And those who suffer discrimination should feel brave enough to speak up on an individual basis, not fear reprisals.

About the author: Josephine Van Lierop is an employment solicitor at Slater & Gordon Lawyers.
* Image license: The Hidden Collection; CC BY 2.0