March 6, 2017

Clyde & Co research finds gender pay gap among high earners remains stubbornly high

The proportion of female high earners* is smaller among the over 60s than those aged 20-29 but not by much, according to research from global law firm Clyde & Co.

Data obtained directly from HMRC reveals that women over 60 accounted for just 23% of all higher rate tax payers in this age group in the last financial year.

For female millennials the picture is only slightly more positive despite hopes that gender equality will be markedly better for this generation. Women represent 31% of all 192,000 higher rate tax payers aged 20-29.

Gina Wilson, Employment Partner at Clyde & Co, comments: "Until there is a far more even split between the genders there is clearly still work to be done."

"For the over 60s the problem is perhaps less surprising. Women find it harder to get into those higher paying senior roles, especially when they have had to deal with maternity leave and childcare responsibilities when returning to work.

"However, those under 30 should be freer of that conscious or unconscious bias and as able to attain high paying jobs as their male counterparts. The fact that they're not is very concerning. With the implementation of gender pay gap reporting just round the corner, the Government will be hoping this will improve things."

Clyde & Co explains that the most recent and significant Government initiative aimed at reducing gender pay differences is gender pay gap reporting. Under the new regulations, which come into force in April 2017, organisations with 250 or more employees and workers will need to disclose gender pay and bonus pay gaps.

However, there is no requirement for employers to distinguish pay gaps by age group or to identify differences in pay between employees with children and those without (see notes for more detail). 

The last-minute move by the Government to include all workers and not just employees means that more organisations will now have to disclose their gender pay gap data. Although, the Government has also decided that partners do not need to be included in the reporting, so the larger accountancy and law firms will not need to disclose the pay gap for their highest earners, adds Clyde & Co.

Proportion of female high earners remains static for fifth consecutive year

Previous research by Clyde & Co in August 2016 showed that the overall percentage of female high earners (of all ages) in the UK has not changed for five years even though the total number of higher rate tax payers in the UK has grown by over 1m, in that time.

Heidi Watson, Employment Partner at Clyde & Co, comments: "Despite a number of very well meaning government and industry initiatives, women are still earning less than men and the figures don't seem to be improving fast enough. This is an issue for organisations across the country, most of which we must assume aren't actively setting out to pay women less."

"Gender pay must become a boardroom issue. Thanks to mandatory gender pay reporting, companies who report better figures stand to gain a competitive advantage. While there is no punishment for those that don't come out as well, don't forget that as well as reputational damage, the Equality and Human Rights Commission can take its usual enforcement action against employers who are proved to be in breach of the Equality Act, which can ultimately lead to criminal proceedings." 

Reducing the gender pay gap

 Clyde & Co says that business should be focusing on the following in preparation for the new rules: 

  • Review current pay data to identify any problem areas ahead of the date for capturing reportable pay data on 5 April 2017
  • On 5 April 2017, take the snap shot of pay data
  • Review snap shot data and consider how best to report it, following the requirements of the rules, and consider whether to report more than the bare minimum
  • Before 4 April 2018, report the data on the company website and the government website, signed off by a director or equivalent
  • Take steps to reduce the gap for the following year including:
  • Effective monitoring of differences in the recruitment balance, starting salaries, promotions, and flexible working requests across all job types and levels of seniority, etc.
  • Putting in place internal networks and mentoring to develop female talent
  • Tackle the influence of unconscious bias in the workplace with effective training for recruiters and managers
  • Managing family friendly leave successfully by encouraging men to consider taking shared parental leave and considering whether maternity, adoption, paternity and shared parental pay should be given comparable financial value
  • Ensuring that promotions, especially for senior roles, can function with flexible working arrangements in place
  • Ensuring that the organisation's structure and processes enable talented employees of both gender to progress

*Tax payers declaring an income between £43,001 to £150,000 (higher rate tax payers)