Advancing on the ceiling
23 November 2009
3 October 2014
Failure to pay male employee enhanced additional paternity pay equivalent to enhanced maternity pay not discriminatory
2 October 2014
2 June 2014
16 December 2013
10 July 2014
Law firms are having a good look in the mirror in light of the EHRC’s inquiry into sex discrimination within the financial services sector. By Naomi Feinstein and Marian Bloodworth
Ever since the banking collapse last year financial services providers, in particular the retail and investment banks, have found themselves under scrutiny from all angles - the Government, the FSA, the media and the general public. Over the course of the past few months the spotlight has been shone on other aspects of their business by the Equality and Human Rights Commission (EHRC) and its inquiry into sex discrimination in the sector.
The inquiry was borne out of the white paper on the Equality Bill back in July 2008. The paper highlighted a pay gap average in the financial services sector of 41.5 per cent, as compared with a national average of 12.6 per cent. This prompted Minister for Women and Equality Harriet Harman to order the EHRC to undertake an inquiry into sex discrimination in the sector.
Initially professional services firms were also included in the scope of the proposed inquiry, but this aspect was later dropped. Impetus was inevitably added to the inquiry by the banking collapse and in particular press reports that rescue operations for the Icelandic banks were being led by female bankers.
Using its statutory powers the EHRC launched the formal inquiry in April this year, putting out calls for evidence from interested parties (including employees and their representatives), and sending a questionnaire to 50 financial services organisations as a representative sample. The questionnaire sought data on their pay and equality practices in order to gain more information regarding the alleged pay gaps within the industry, as well as data on the efforts taken to support women. Responses were required by 9 June and the EHRC published its report on 7 September.
The headlines were stark: the mean gender pay gap (comparing gross salaries of men and women working full-time) was 55 per cent and the mean gender gap on bonuses was 80 per cent.
However, for many firms the data does not represent the reality. While for some responding to the inquiry will have revealed pay anomalies that can now be addressed, for others the issues are more nuanced.
The headline figures illustrate to some extent the limitations of the data: employers were asked to calculate pay gaps by taking the average pay earned by women as a percentage of the average pay earned by men. As such, even where this involved comparing data within a specific grade, the comparison could not take into account the relatively flat structures operated by many banks and the range of roles included within the grades. This led to a concern that in many cases apples were being compared with pears.
The report refers to job segregation, which many banks would probably acknowledge, with lower-paid roles predominantly occupied by women, and senior roles largely by men. Again, this is a more complex problem in itself, reflecting as it does the choices made by women with family responsibilities and career choices made by school and university students.
As such these are societal issues and not ones that can be considered solely the responsibility of the financial services sector.
In its report the EHRC made a number of recommendations to the sector as a whole, the main ones being:
- appoint a board member with express responsibility for gender equality;
- increase transparency through job evaluations and pay audits; and
- ensure equality policies are pursued actively and monitored.
By the time of the report’s release further pressure had been placed on the sector by the launch in August of the Treasury
Select Committee’s own inquiry into sex discrimination. Following a general call for evidence from interested parties, a number of investment banks were called to give evidence to the committee in October. The inquiry created much publicity, not least the comments made by Nicola Pease, deputy chairman at JO Hambro, regarding the impact of maternity leave rights on women’s ability to progress within the industry.
Reports this week of the claims being brought against Nomura by two female bankers, with allegations of inappropriate conduct by male colleagues, are further reminders that the issues highlighted by both inquiries continue to affect the sector.
However, it is not just the banks that are being obliged to analyse their working cultures and address the progress of women employees. The legal profession has been doing the same recently, albeit voluntarily, but no doubt due in part to the increased profile given to these issues.
Clifford Chance and Norton Rose are both taking steps to address female lawyer promotion and partnership prospects, while Lovells’ women’s network has launched a pilot mentoring programme recently in response to requests from female employees.
Since EHRC chair Trevor Phillips has made clear that tackling sex discrimination is one of his key priorities, it seems likely that it will remain high on the agenda for all businesses in the City for some time to come.
Naomi Feinstein is a partner and Marian Bloodworth an of counsel and co-chair of the women’s network at Lovells