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Energy Law Exchange

February 7, 2018 - Source: King & Spalding Energy Newsletter

Power Balance: Energy Companies Face UK Gender Pay Reporting

From April this year, any company with UK operations comprising 250 workers or more will have to publish details of their gender pay gap information. Organisations must publically report how much, on average, is the pay disparity between their male and female workers. Data, which must be published on both the public website and reported to government, includes:

  • mean gender pay gap in hourly pay;
  • median gender pay gap in hourly pay;
  • mean bonus gender pay gap;
  • median bonus gender pay gap;
  • proportion of males and females receiving a bonus payment;
  • proportion of males and females in each pay quartile.

Companies within the energy sector will face some unique challenges in trying to represent and reflect the numbers, not least the myriad of nuances that shape the statistics. Overall, there is a higher percentage of male employees on the roster for energy companies, which is similar to other industrial sectors as, statistically, fewer women enter STEM (Science, Tech, Engineering and Manufacturing) areas. As an example, the Oil & Gas UK Workforce Report 2017 stated that 22,739 people were employed in the Central North Sea in 2016. Out of those, 21,747 were male and just 992 – or 4.3 percent – were female.

To compound this, generally there are fewer women in senior leadership positions (who by consequence are the higher earners) with more women in part time roles (who by consequence are the lower earners). It will not come as a surprise then that energy companies may find themselves dealing with uncomfortable gender pay gap numbers even when compared to other industries (the UK Treasury suggests that national median gender pay gap is 18.4%).

No knee-jerk reactions

With the April date looming, organisations will have – or definitely should have – already collected and digested their data. They will now not only have to present the statistics but also try to explain the reasons behind any anomalies in a rational and transparent way. There may well be a disparity between male and female pay, and while that does not automatically mean this is due to discrimination by energy companies, there is a large risk of reputational damage. Indeed, energy companies are already a prime target for protests and campaigns by social, political and environmental activists; appearing to be institutionally sexist towards women adds another potential image issue.

Organisations should refrain from any rushed responses to perceived unfairness, especially in light of the instant reputational hit they may receive. There is no way around it; double digit discrepancies in gender pay are going to look bad and prompt immediate claims of discrimination or failing to nurture female talent. However, even appearing to imply that any skewed figures are a result of discrimination (which is unlawful in the UK) risks opening the door to potential claims from disgruntled employees. Other ides such as slashing male workers’ pay or issuing pay caps can also create a number of long-term problems.

Energy companies should, instead, try to look at the bigger picture, both in terms of the issues and solutions. The reality is that a whole host of factors impact on pay. Gender may be one of them but the impact of career choices, overtime, experience, seniority, performance and so on all influence pay rates, too. Organisations should be reviewing the most effective ways to establish and deliver a process and structure to ensure that the entire remuneration model is fair and reflective in order to negate any possible claims of bias.

Long-term outlook

The initial PR hit of being labelled as underpaying women may be painful but the solution has to be to assume a long-term outlook. Organisations should be mulling over a selection of options, including:

  • Starting at the grassroots, such as initiatives aimed at recruiting more women by sponsoring career events at universities. Some organisations are going further and sponsoring (usually in partnership with a charity) STEM initiatives at schools and universities or offering bursaries for females studying these subjects;
  • Increased focus on a company’s diversity awareness ambitions, for example, a number of organisations are offering unconscious bias training and additional diversity training for those making recruitment or promotion selection decisions;
  • Offering increased parental benefits and encouraging flexible working in a drive to attract and retain female talent;
  • Creating leadership opportunities for women and increasing role model and sponsorship opportunities.

Few people would ever claim that discrimination does not exist, although managing a diverse workforce in a fair and responsible way is a complex and sensitive job. Reporting any possible gender pay gap may appear counter-intuitive, at least on the surface, but organisations should embrace it as a chance to update and improve their wider work structures.