August 1, 2016

No increase in the proportion of female high earners for fifth consecutive year

The proportion of UK female high earners has remained static for the past five years, despite the drive to increase the number of women in senior positions, according to new research from global law firm Clyde & Co.

"The figures have remained static because initiatives so far have been voluntary and aren't sufficient to bring about change. What's now proposed is a firmer approach through legislation being introduced later this year that obliges businesses employing 250 or more employees to report their gender pay gap. Businesses should promptly carry out mock audits (ideally through Solicitors so that the information is legally privileged) in order to take steps to reduce the gap ahead of the reporting deadline." - Gina Wilson

Data obtained directly from HMRC reveals that women accounted for just over one quarter (27%) of all higher rate tax payers in each of the last five financial years. Last year just 1.26m of the 4.64m higher rate tax payers were women.

Clyde & Co points out that the percentage of female high earners 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 individuals.

There have been several recent government and industry initiatives launched to increase representation of women in senior roles, including:

  • Lord Davies' new target for FTSE 100 firms to have 33% female board members by 2020.
  • A voluntary charter aimed at getting more women into senior roles in the financial services industry, which several major UK banks have signed up to.
  • Many individual businesses are setting their own targets - last year Lloyd's Banking Group announced that they are aiming to have women in 40% of their Senior Management roles by the end of the decade.

Heidi Watson, Employment Partner at Clyde & Co, comments: "It is clear that the initiatives launched so far have not had an impact on national figures for women in high earning positions, which in turn impacts on the national gender pay gap. The Government will be hoping that the new gender pay reporting rules can change that."

Clyde & Co explains that the most recent and significant Government initiative aimed at reducing gender pay differences is gender pay gap reporting.

In July 2015 David Cameron announced new rules that will require UK organisations with 250 employees or more to publish information about the difference between the average pay of their male and female employees (details of full reporting requirements and timescale below).

Heidi Watson continues: "While there are no penalties for breaching the rules, the risk of reputational damage is high. Some critics believe the rules lack teeth but the public scrutiny firms will face through 'naming and shaming' is likely to be intense."

"One of the most significant causes of the pay gap for most organisations is the lack of women in senior roles.  If an organisation can crack this, they will be way ahead of their competitors.  This data shows the impact of any current programmes is not yet being felt".

Charles Urquhart, Employment Partner at Clyde & Co, says: "With only 8 months to go businesses should be trying to get ahead of the game before the first round of reporting is required."

"There are steps that organisations can take now to ensure that the data that they have to publish presents the organisation in the best light. These include: conducting an audit (after taking legal advice, to ensure that the results are subject to legal privilege); analysing the audit data to identify areas of concern and then endeavouring to resolve those concerns".

"A number of organisations have tested the audit process already and found that the results were even worse than feared. Forewarned is forearmed and by starting to consider compliance early, organisations can begin to review how they recruit, promote and reward their staff with a view to identifying and then ironing out any gender based barriers which might hamper success."

Heidi Watson adds: "Don't get caught out: identifying problem areas now also allows employers to consider what additional information they might publish, over and above that required by the new regulations, to tell a positive story about the way in which the organisation values its workforce and is working to reduce any gap."