Employers gear up for gender pay gap reporting: is your organisation ready for the discussion? - Kingston Reid

Employers gear up for gender pay gap reporting: is your organisation ready for the discussion?

In this article, Geoff Fowlstone, founder of strategic communications firm Fowlstone Communications, specialising in crisis management, media relations, investor relations, government affairs and internal communications and Shelley Williams, a Partner in Kingston Reid’s Brisbane office, provide practical insights on how reporting Australian organisations can prepare for the publication of gender pay gap data later this month.

The issue of gender pay equity is never far from the public agenda but is now poised to rise to the fore of national headlines, courtesy of the inaugural release of the Workplace Gender Equality Agency’s (WGEA) gender pay gap analysis.

On 27 February 2024, for the first time, WGEA will publish private sector gender pay gap data of employers with more than 100 employees. This development comes as part of a raft of legislative changes introduced in 2023 intended to address Australia’s gender pay gap (currently 21.7%, according to WGEA’s employer census data as at November 2023).

Every Australian company that falls within this category needs to have a plan to respond to the imminent release of this first ever look ‘under the hood’ at gender pay performance, across a vast cross section of industries and occupations. This will create a minefield of legal and reputation challenges for organisations who may (depending on the data) be seen to be laggards in gender pay performance, some quite unfairly.

As Mark Twain famously opined “There are three kinds of lies: Lies, Damned Lies, and Statistics”.

WGEA’s methodology can best be described as blunt (average pay for men divided by average pay for women) and leaves little room for context. For example, there is no differentiating between industries across different Australian states and territories, and different organisational or remuneration structures.  The United Kingdom, by contrast, takes a more nuanced approach, reporting in quarterly bands, based on seniority.

WGEA will not differentiate between, for example, a consulting firm with a high level of junior support roles (typically dominated by women) and a manufacturing business which does not.  This is hard to defend in a sound bite!

However, employers will be given the opportunity to provide an Employer Statement which explains their gender pay gap results. This will need to be carefully considered and drafted to provide much- needed context, which will otherwise be missing without any public statement.

The data will also not pay heed to shifts in performance over time, that is, those organisations which acknowledge they have a gender pay gap issue and are making inroads to address it.  Implementing meaningful change takes time to gain traction.

Importantly, WGEA is not reporting on pay equity (that is, do men and women at the same level of seniority get paid equivalent amounts) which many regard as a more insightful measure.

The Workplace Gender Equality Act 2012 (Cth) (which governs WGEA and its functions), contains provisions relating to employer non-compliance with the Act. The only power WGEA has under the Act is to name and report non-compliant employers publicly and to the Minister for Women, (currently Katy Gallagher). Any attempt to avoid the reporting obligations or potential public scrutiny will therefore be misguided.

The experience in the United Kingdom, where mandatory gender pay gap reporting has been in place since 2017, provides some useful insights into what issues arise and how organisations can prepare.

Firstly, the publication of the data generated strong media interest sparking a fresh debate on gender pay.  Companies which had never before seen public profile suddenly found themselves in the limelight and under pressure to explain their performance.  This included Australian companies with a large UK employee cohort.

Secondly, industries which performed poorly received significant focus, with a detailed trawling through the results and analysis of the drivers of underperformance.

Organisations that responded effectively were prepared well in advance and had a simple narrative to explain their results and place them in the most effective context.

Australian companies preparing to face the gender pay blowtorch need to focus on five key things:

  • Demonstrate clearly, with language and actions, that they are taking gender pay equity seriously and that it is a priority across the organisation, with positive examples that support this contention.
  • Have a clear statement about the support for these changes at the most senior levels of management. People need to see that this is not a ‘lip service’ attempt to deflect the issue and that there is buy-in at the highest levels of the organisation.
  • Communicate strategies in place to address this issue over time and, where possible, show how these are delivering measurable outcomes over time.
  • Have a plan in place well in advance – organisations need to consider who is important to communicate with and the most effective strategy to engage. For example, employees, customers, suppliers, strategic partners.
  • Consider and plan for the possibility of an increase in discrimination complaints and general protections applications following the release of the gender pay gap data. While the data will provide an overall organisational score, employees now have a workplace right to ask other employees about what they get paid and there is also a prohibition on pay secrecy. This means these different data sets could be used by an employee to form the view that they are paid less than their colleagues at the same level of seniority based on their gender.

If you would like to learn more about these changes and how you can best position your organisation to respond to the publication of gender pay gap data on 27 February 2024, please contact us for further information.

 

Shelley Williams, Partner, Kingston Reid
+61 439 268 928
[email protected]
Geoff Fowlstone, Principal, Fowlstone Communications
+61 413 746 949
[email protected]