Inequality in the City

The Equality and Human Rights Commission has just published its enquiry where it announced that within the financial sector, women employees earned on average less than 39% in salary and 80% in bonuses than men. This seems surprising when you consider that the Equal Pay Act which was brought in 1975 appears not to have addressed the problem at all.

Why has this occurred? It is difficult to generalise but likely factors are the lack of transparency in relation to bonus schemes allowing for discretion which rewards those that shout loudest, perception that female employees will not have the same level of commitment particularly if they have families, and managers rewarding those that fit within their mould. A further factor is whilst Employers give lip service to equal opportunities, it does not change the mind set of those operating the remuneration process. Also managers are very unlikely to accept they are being discriminatory or being challenged by anyone that that they are.

This report comes at a time when the whole bonus regime within the financial sector is being scrutinized and challenged. The issue of discrimination is likely to be regarded as a lesser consideration bearing in the mind the pressure on employers to place controls on bonuses and balance that with retaining key staff.

Recommendations going forward. The importance of ensuring transparency in the remuneration process. Proposed legislation will prevent employers from victimizing employees who discuss their salary and bonus with other employee. The ECHRC would like it to go further and ban employers from placing any secrecy restraints on employees discussing salary and bonuses. There are the usual calls on encouraging employers to carry out regular audits on salary and bonuses to ensure equality. Whilst these are recommended within the current code of practice they are generally not observed. The ECHR is to recommend some mandatory obligations on employers to ensure fair pay processes. Another suggestion is to work with the Regulators in promoting equality in pay. This perhaps would have the most teeth in ensuring compliance by employers.

Will this open the floodgate of further claims? Unlikely; the costs and damage to reputation are likely to act as a deterrent for most employees. Further there have been numerous high profile cases where the woman employee was not successful. In a time when there are less jobs employees fear being targeted as a trouble maker and therefore less employable.