It doesn’t make sense, does it? The National Minimum Wage is a very simple concept, that there should be a minimum rate you should pay employees for their work. The rates are published and it is surely inconceivable that any company should fail to meet this requirement, no?
Named and shamed
Last week the Department for Business Innovation & Skills published its latest list of employers who have failed to pay workers the National Minimum Wage. This list of named and shamed companies is actually produced quarterly, with anything between 50 – 100 companies named each month, but the release gained particular media attention due to the presence of a big High Street name, Monsoon Accessorize, which had been found to have underpaid 1,438 workers.
So, why are employers flouting the law and cheating their workers out of their legal entitlement?
Misers or mistakes?
The simple answer is that employers aren’t trying to cheat the system or workers. The government press release does not go into detail about how each company has broken the law, but many companies attempt to proactively address the reasons for their inclusion on the list in local or national media. From this we build a picture not of Ebenezer Scrooge wannabes determinedly trying to squeeze every penny from their employees, but rather misunderstandings or oversight; whether failing to note an apprentice’s birthday has moved them into a new pay category, or staff working more hours than accounted for when pay was originally set, bringing down the actual hourly rate and thus leading to people being paid below the minimum wage.
The Monsoon Accessorize statement is another fascinating example, with the underpayment apparently relating to deductions directly from pay for staff who had bought discounted fashions to wear at work. This came to light when HMRC reviewed their payroll arrangements, which suggests something likely introduced as a convenience to allow employees to enjoy discounts on company products through direct payroll deductions, was clarified by HRMC as employees having deductions taken to pay for ‘uniforms’ which in 1,438 cases took employees below the national minimum wage.
Careless, yes. Defensible, no. Deliberate, not really. This is not to defend all companies on the list or say that there aren’t companies out there who aren’t trying to reduce their costs at the expense of employees, but it highlights the ways in which even something that should be as simple as paying a minimum wage still trips up employers.
Lessons for gender pay reporting
With compulsory gender pay reporting coming into force next year for companies with more than 250 employees, there’s an important lesson which can be learned when you investigate your company’s gender pay position; though you may not be deliberately and directly discriminating on gender pay, it is very easy to inadvertently allow discriminatory situations to have established themselves without you realising.
No company I have worked with has tried to pay women less than men, yet no equal pay audit I have run has found a pay gap of less than 10% in favour of men. In many cases this was down to a ‘structural’ pay gap, with pay being equal at each level in the business but there simply being proportionally more men at the top of the business and more women at the bottom.
Take action on what you can affect
It’s easy to wash our hands at this point and say that the pipeline is not there for women in senior positions or that it is a societal problem. But when we see articles highlighting as many as 50,000 women a year ‘forced out of work’ as they’ve been treated so poorly returning from maternity leave they felt they had to leave altogether, or more than half of working women believing that male-dominated leaders hire and promote ‘in their own image’ creating a barrier to their career progression, we need to be honest about whether or not this could happen in our own organisations.
We can all take a look at our policies and processes around things such as handling maternity leave and internal promotions and consider whether or not there are unconscious biases which may be creating obstacles for women and whether they are therefore fit for the purpose of helping to attract, retain and develop the best talent you can find, regardless of gender.
If you have not already started looking into your gender pay gap I recommend you get started without delay, using the time before compulsory reporting kicks in to get ahead of the game. While the compulsory requirements are not yet published following the national consultation, Equal Pay audits are well established and you can find advice on tests to consider in my earlier blog, ‘Mind the Gender Pay Gap’.
If you investigate and start identifying where you may have a pay gap now and why it might exist, you can ensure that your first compulsory report highlights the actions you are already implementing to tackle your gender pay gap, rather than the ones you will need to take.
