Pay “audits”: a win for Lynne Featherstone despite what anyone else says

“Coalition abandons compulsory audits of pay gap between men and women…. in a reversal of a Liberal Democrat manifesto pledge.” So claims the Guardian and numerous others, wringing their hands. But are they right? Has the Minister really abandoned her principles, six months into power? I humbly disagree.

On 2 December, the Government Equalities Office (GEO) published the coalition’s new equality strategy document, Building a fairer Britain, together with a press release summarising the key points.

What you might have read

The Guardian was outraged:

Coalition abandons compulsory audits of pay gap between men and women

Lib Dem equalities minister announces U-turn on party’s manifesto pledge…

…Plans to force businesses to disclose the pay gap between male and female employees in Britain have been abandoned by the coalition government, in a reversal of a Liberal Democrat manifesto pledge.”

Well, actually, that’s not really what’s happened. But let’s not let facts get in the way of a good anti-coalition story.

The story has been spun in this way elsewhere, for example, this article on the Labourlist blog. Granted, the name of the blog suggests they may not support the Coalition. But they seem to have misunderstood even the Labour party’s position on these issues.

Dismantling equalities: the Coalition scraps gender pay audits

After an introductory paragraph, it reports:

“… today’s announcement that the government plans to scrap the duty on companies to disclose how much they pay women and men should come as no surprise. The duty was introduced into the Equality Bill by Labour in order to begin the pro-active approach which is critical if the disgrace of unequal pay is ever to be tackled in this country. A creature of compromise (despite Harriet Harman’s best efforts), the gender pay audit clause placed a positive duty on companies with 250 or more employees to audit their pay in order to reveal, and then address, gender pay discrepancies.”

Even City AM, bless them, have gone with the headline “Gender pay audit plans are scrapped“.

What are they talking about?

This is about section 78 of the Equality Act 2010, which is not yet in force, but which is simply a regulation-making power, giving the government the option of forcing private sector employers with 250 or more employees to publish the average pay of men and women in their organisation. Section 78 deals with what has come to be known (wrongly) in the press as “compulsory gender pay audits”.

Now I’m not agreeing with the government’s strategy here, let’s be clear. But I’m not about to use this blog to start deconstructing and criticising the strategy document, although I’ll confess that their approach seems rather, well, woolly, with the phrases “work with business”, “lead by example” and “voluntary” appearing a bit too often for my liking, although the CBI, inevitably, love it.

However, as seems to be de rigeur in this world of coalition politics, there are some people who are, frankly, disappointed, if not feeling a little bit betrayed. On the one hand you’d think the Institute of Directors (IOD) would be pleased with the whole voluntarist approach, but their press release is very begrudging about this, and they seem to be more than a little miffed that the government has not just swept the whole of section 78 away and accepted the, er… “hard evidence” that it’s mostly women’s life choices and other “influences” (whatever they may be) that cause unequal pay.

The Torygraph piece adopts the IOD’s grudging tone, focusing on the lingering “threat” of section 78.

But hang on, didn’t the Guardian et al just suggest that they ARE sweeping section 78 away?

Not so.

Why the Guardian, Labourlist et al are wrong

For one, there was never any question of Labour’s law giving rise to gender pay audits, compulsory or otherwise. The word audit appears nowhere in the Equality Act or any of its literature. An audit, strictly speaking, is a process of gathering and looking at data across a spectrum of jobs within the organisation, identifying potential gender inequalities, and addressing them. What Labour was going to bring in, if it ever got around to it, was just a duty to publish the average pay of men, and the average pay of women. That’s it. Two figures. Pretty meaningless.

And then what? Well, there was not (as Labourlist seems to suggest) any duty to “address” the problem. Presumably, the employer would either be shamed into changing their ways, or else somebody would sue, and/or the employer would just try and explain away the difference (based, presumably, on the IOD’s “hard evidence” – see above).

ONLY if this voluntary plan didn’t work, would Labour have issued regulations under section 78, and they committed to not doing this before 2013.

And what are the coalition going to do?

Meet the new boss, same as the old boss…?

… as The Who sang in “Won’t get fooled again“. Or alternatively, as @MarkTarran put it on Twitter the day the announcement came out:

“… after much bluster, new gov decides to do pretty much what old gov said it would do”.

What the goverment have decided to do, in short, is this. The GEO will “work with” employers of 150 staff or more, to encourage a voluntary approach to disclosing the pay levels of men and women in the organisation, before deciding, based on the results, whether a legislative solution is necessary. This MAY include bringing into force regulations under section 78 of the Equality Act, or some other legislative solution.

Sound familiar? Apart from a willingness to consider something better than the frankly pointless section 78, and the actual question of how many employers will be covered (see Lynne’s wins, below) I can’t see much real difference from Labour – and certainly not a reduction in scope.

But let’s be clear about one thing: the government have, at this stage, RULED OUT ANY REPEAL OF SECTION 78 until the voluntary approach has been tried. So reports of anything being “dismantled” are premature at best.

Ah, but it’s still a Lib-Dem U-turn

Technically, yes. In the words of Labourlist, Lynne “declared piously” in 2008 that:

“A voluntary audit system for private industry is hardly worth the paper it’s printed on.”

She (together with Lord Lester in the Lords) was tenaciously pushing this agenda throughout the Equality Bill’s passage through the Commons in late 2009 and early 2010, demanding compulsory pay audits for employers with over 100 employees, in the face of pretty strong opposition from both Conservatives and Labour. The Lib Dem Manifesto repeated this commitment, and I can see how people are disappointed at Featherstone’s apparent u-turn. But I’m guessing it has come through gritted teeth on her part with a tacit acknowledgement that this is the best she can get past her new boss, Theresa May, and the rest of the Tory-led cabinet.

I expect what she really means is that she’s going along with the whole voluntary approach for now, but when it inevitably fails she will push for something better than section 78. Whether she’ll get it remains to be decided another day.

Not every compromise is a u-turn

A “manifesto commitment” is basically what you would do if your party was in power, not what you would do if your party scraped in, as the poor relation in a coalition. In a world where your party still has less than a quarter of the seats in parliament, not every political compromise amounts to a manifesto “u-turn”. In some cases, it amounts to a massive win.

Lynne’s wins

First, the Tories would have scrapped section 78 entirely. They said as much in Parliament before the election, and committed to never bringing it into force. So, given the new approach is just Labour with a twist, who’s done the biggest u-turn?Their approach would have been to only impose an audit (whatever that rather devalued word means) on employers that lost an equal pay claim. So someone would actually have to sue and win before the company was even obliged to look to see if there was a problem. And, at the risk of banging on about statistics after my last rant, virtually NOBODY actually wins an equal pay claim. They trundle on for so long, with hearing after hearing on interim points, that long before you actually get to a declaration of who’s won, the vast majority are settled through Acas or withdrawn (which may indicate a private settlement). Less than 1% of cases are actually “won”.

Second, there is one MASSIVE improvement over Labour’s scheme. Section 78, and the Labour voluntary approach (already  developed by the EHRC before the election) was limited to employers with 250 or more staff. Lynne’s voluntary approach covers vastly more employers, as it will include anyone with 150 or more staff.

An aside: looking to the positive

Another announcement in the strategy paper was that the “positive action” provisions of section 159 of the Equality Act will be brought into force on 6 April 2011. This would also have been scrapped by the Conservatives, so it is presumably something else Lynne and the Lib Dems have got their way on.

Section 159 enables an employer in a recruitment or promotion situation to choose a candidate from an underrepresented minority group. However, this doesn’t apply if any of the other candidates are better on merit, in other words, it only applies in tie-break situations, and the employer is not obliged to resort to this at all (i.e. it can resolve the tie-break in some other non-discriminatory way if it wants to). In that sense, the employer can behave as if section 159 doesn’t exist at all, and my belief is that most employers will do just that.

I’m going to leave it there as far as positive action goes. I might touch on it later. For now, Darren Newman has done a good job here.

About Mrs Markleham

Mildly peevish employment lawyer and discrimination lawyer.
This entry was posted in Discrimination, Equal pay, Equality Act, Myths, Press hyperbole, Sex discrimination. Bookmark the permalink.

5 Responses to Pay “audits”: a win for Lynne Featherstone despite what anyone else says

  1. I don’t know about you but I have every confidence that voluntary measures will work. It is worth reflecting that they delayed the introduction of the EqPA 1970 for 5 years to give business a chance to get its house in order. By the time the Act came into force gender pay inequality had almost been eradicated … er …

  2. Pingback: Tweets that mention Pay “audits”: a win for Lynne Featherstone despite what anyone else says | Mrs Markleham --

  3. Pingback: Positive action, positive discrimination, the equality strategy and the Equality Act 2010 | Work/Life/Law

  4. lynne featherstone says:

    This is the most accurate piece I have read on the policies I announced. It is reassuring to find intelligent analysis.

  5. From day one reporting on the Equality Act has been both inaccurate and dumbed down. Why – because it was down to the press to try and ‘sex it up as there was nothing particularly radical going to be introduced by the time it had been watered down by the Labour gvt.

    There are good business reasons for encouraging pay transparency in all workplaces just as there is for ensuring equality and diversity. Let’s have a real debate as Mrs Merton would say…..

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s