Overcoming gender pay and pension gaps: how reward policies can help
The gender pay gap was 14.3% across all employees, full and part time, in 2023 in the UK. This month, as employers finalise their pay gap action plans ahead of the 4 April reporting deadline, we outline how employers could expand their pay gap action planning.
A two-tiered approach works best, says Barnett Waddingham. Here, it looks at how to use your reward strategy to lessen the immediate impact of the gender pay gap and life events on employees.
Trying for a family
One in seven couples experience fertility issues, with women disproportionately affected in terms of medical interventions.
- IVF funding and/or support – Employers could offer financial support with IVF, or access to providers that help employees make more informed and potentially more cost-effective decisions, while reducing the potential for mental health leave.
Early parenthood
The Fawcett Society’s Motherhood pay penalty research in 2023 found an average gender pay gap of 10% between mothers’ and fathers’ hourly pay when the first baby arrives, which grew to 30% by the time the child was 20.
- Baby-ready discounts – Demonstrate savings available through your discount scheme on a bundle of baby goods.
- Top up statutory maternity leave – Consider increasing maternity pay up to the full time equivalent, or offer pay beyond 39 weeks.
- Close the pension gap – Look into enhancing employer pension contributions, potentially based on full-time equivalent pay during parental leave and for those returning on reduced hours. This can come alongside communications on salary sacrifice options, impacts on statutory maternity pay if salary is reduced, employer responsibilities to maintain employer and employee contributions, and the potential impacts of voluntarily stopping pension contributions.
- Fair pay, high quality part-time work and development opportunities – Short term initiatives could include ensuring all jobs, particularly senior roles, are advertised as flexible or open to part time/job share, and putting in place clear and transparent career and promotion pathways, especially for part time workers.
Children under school age
The government’s extended childcare support programme will offer 15 hours of free childcare for all children in England from the age of nine months from September 2024, extending to 30 hours in September 2025, for working parents of children under the age of five.
However, fees for non-funded nursery places and ‘extra’ costs are being raised, to cover the true costs of the funded places. Some parents using nurseries for childcare beyond 15 hours are now worse off, with one survey finding that 45% of parents were borrowing money or withdrawing their savings to pay for childcare.
- Access to workplace lending and pay advances – This needs to be managed carefully to avoid debt accumulation, but can provide a cost effective way for employees to manage short-term borrowing.
- Flexible working – This gives employees more choice over nursery options and may enable a reduction in childcare costs.
Health inequalities
The UK has the largest female health gap in the G20 and the 12th largest globally. Benenden reported that 42% of women have seen their professional life negatively impacted by health.
Work is being done. The Equality and Human Rights Commission issued new advice for employers on menopause and the Equality Act on 21 February, for example – but employers can help improve things further.
- Extend women’s health benefits – There are a lot of new benefits entering the marketplace, including health screens and support from home for menopause, fertility, hormone, HPV and thyroid issues.
- Employer funding – Lower pay can lead to women being unable to afford expensive health benefits. Consider healthcare for all to help employees and reduce your cost of absence.
Divorce
Legal and General's Divorce Gap Research 2021 reported that womens’ incomes fall by 33% after divorce, compared with just 18% for men. The position is worse for cohabiting women because of the lack of legal rights.
- Workplace savings – These can build independent savings for women, especially useful in funding legal advice in the event of divorce.
- Domestic abuse policy – These policies can provide invaluable support, particularly when the workplace is the only safe and trusted space.
Eldercare
Carers UK found that 40% of carers had given up work to provide unpaid care, and 22% had reduced their working hours to provide care. Carer’s Leave Act 2023 legislation will come into force on 6 April this year, giving employees a statutory right to a week’s unpaid leave to care for a dependant.
- Eldercare benefit – Barnett Waddingham offers Legal & General's Care Concierge Service to to make it easier to navigate the care system.
- Carer’s policy – Employers can offer enhanced benefits beyond the legislative requirement.
While employers can’t eradicate gender pay and pension gaps overnight, they can make a big difference by offering support, reward policies and employee benefit arrangements to reduce the impact in the short term.
In partnership with Barnett Waddingham
Everything we stand for at Barnett Waddingham is embedded in our promise – to do the right thing. We’ve applied this meaningful principle across all aspects of our business with continued success.
