Why The Equality Act 2010 doesn’t target SME’s, and what can be done

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The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has come into force and means that companies with over 250 employees must report their gender pay gap data.

The SME sector was not included in the gender pay gap legislation because of the impact on them of having to undertake the significant data analysis. However, as we know most of the working population is employed by SME’s and they have a crucial role to play when it comes to tackling the Gender Pay Gap.

Despite great strides having been made, there are concerns that we will ever reduce the Gender Pay Gap by way of legislation. Attitudinal behaviors ingrained through the education system and from an early age means that women are more likely to make decisions that will enforce the Gender Pay Gap. For instance, women tend to take on more caring roles, whether that would be childcare or looking after the elderly. All too often, they are encouraged into non-STEM subject careers that are less well paid and undervalued. They are also encouraged to seek a work-life balance, even though men are not taught to seek it in the same way.

It is certainly not the ability of women that hinders them, they are both equally willing and capable of negotiating, but stereotyping views their ability to do so as a negative trait in their career development. Attitudes need to be changed at an earlier stage, otherwise it is difficult to see how legislation on its own will resolve the problem.

One of the biggest challenges that SME’s face is the cost of maternity leave and cover, which is significant. Although we now have Shared Parental Leave, the take up is low. Men still do not share childcare responsibilities and until attitudes change, women will continue to bear the brunt of it. They will seek roles that give them flexibility, work-life balance and career breaks rather than promotions. It’s a vicious circle, particularly if men continue to be the higher earner in any relationship and not take Shared Parental Leave, unless it will involve full pay, and this is something SME’s cannot afford to do.

SME’s need to be encouraged and educated on the quality and skills that women bring to a workforce. Each gender brings a quality to an organisation that adds to rather than detracts from a business’ ultimate objective.

The loss of an individual on maternity leave has to be put in context and steps could be taken to encourage women to return, such as bonuses (usually reserved for performance), which ultimately save on recruitment costs.

There has been a lot of talk in the press recently about the UK’s lack of productivity compared to other countries such as France and this has been linked to poor management and underutilisation or resource. Fear around a lack of resource and the impending skills shortage means that SME’s need to think more strategically and to be savvier about the skills available in their workforce. They need to understand what skills women bring to the table and comprehend that diversity can affect the bottom line for the better. Old fashioned thinking about who gets promoted needs to be turned on its head across businesses of all sizes. Use of resource needs to be analysed carefully because dismissing people based on career breaks or flexible working needs, will result in loss of skills and knowledge, which is shortsighted in the grand scheme of things.

Another way to address the Gender Pay Gap is to look at how the new legislation could help SME’s look at the issues at hand. Despite it only covering larger organisations, most SME’s are suppliers to these organisations and will be part of their supply chain; these businesses should be encouraged to seek assurances from SME’s, as part of supply chain management, that gender pay is on the agenda. So despite the lack of government scrutiny, SME’s could be encouraged into looking at their practices and with competition high, those who publish alongside the large corporates will find themselves a sought after commodity both for recruits as well as customers.

As for the government’s role, it could encourage the large corporates to support and provide training or mentoring to their supply chain on the Gender Pay Gap through their own experience, in a collaborative process that will gradually lift the barriers to female progression.

Beating SME’s over the head with a stick is not the answer, it is about education and a change of attitude and positive role modeling that will make the difference. We have to understand that they are the livelihood to our economy, and they need the support to bring change and improve women’s position in the work place.

There is only so much we can do once we reach the workplace. Ultimately, the work has to start at home, in the education system and in the media itself, where we should be looking at what we are teaching both genders from infancy in terms of attitudes to roles, career choices and values. However, SMEs should be doing all they can to make up for early deficiencies in society and support women in the workplace.

About the author

Helen Beech, Partner at Clarkslegal

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