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Why SMEs need to take notice of their gender pay gap now

Written by Simon Morgan, HR Dept South East London and North Kent

By 4 April 2018, all organisations with over 250 employees must have published their gender pay gap data. Though for now the spotlight is solely on large businesses, SMEs shouldn’t believe that they won’t be affected.

The issue

Equal pay isn’t a new issue. For nearly 50 years, it’s been against the law for a business to treat a person less favourably in terms of pay or conditions of employment because of their gender. But high profile cases of allegedly discriminatory pay at organisations like Google and the BBC have kept the issue in the headlines over the past year. With all large organisations required to publish their own gender pay gap data next month, attention is unlikely to fade in the foreseeable future.

How will my SME be affected?

  1. Employment tribunal claims. This renewed focus on gender discrimination coincides with a sharp increase in the number of employment tribunal claims – up 90% since the Supreme Court’s ruling last July that tribunal fees are ‘unlawful’. Given that the average tribunal award for a sex discrimination case stands at just under £20,000, it’s crucial to your bottom line that you ensure the fairness of your employee-related decisions.
  2. Scrutiny from employees. Though as an SME you aren’t legally required to report your gender pay gap, the increased media attention may lead to more scrutiny of your pay structure and employment terms from your staff.
  3. Attractiveness to prospective employees. Employees are your most valuable resource, and you want to make sure that you attract the very best. With more and more attention on equal treatment and flexible working, you need to be able to demonstrate that you can compete with the bigger firms in terms of your family-friendly approach.
  4. Growth plans. You may be an SME now, but if you’re planning to grow your firm you may find yourself hitting the 250 magic number soon.
  5. A moving feast. Think about pensions auto-enrolment. It may have started as an obligation for just the biggest firms, but now every employer is required to do it. It’s not impossible that the same will happen with gender pay gap reporting.

What should I be doing now?

  1. Understand your position. Make sure you understand your current gender pay gap, even if you’re not required to report it. Review your data, determine the reasons for any gender biases, and identify ways to address them.
  2. Lead from the top. Responsibility for closing the gender pay gap must rest with management. Communicate your vision for gender equality in the workplace – look beyond pay alone to flexible working, parental leave, supporting women’s careers, etc.
  3. Consider an open salary policy. Be clear about what your employees can expect to earn at each level of the business
  4. Invest in training. Train managers and salary decision makers to limit the influence of conscious and unconscious bias in the interview and compensation processes.
  5. Set an example. Why not consider getting ahead of the game – and your competitors – by voluntarily publishing your gender pay gap data? An open and honest approach will demonstrate to employees current and prospective that you take gender equality seriously.

 One of the fantastic things about being an SME is that you’re often not restricted by tradition or bureaucracy in the same way that many larger firms are. Why not make the most of your nimbleness by leading the charge on gender equality?

 For help understanding and addressing your gender pay gap, contact Simon Morgan at The HR Dept at [email protected]