June 12, 2018 / 11:19 PM / a year ago

British lawmakers call for tougher pay gap rules

LONDON (Reuters) - Britain’s new gender pay gap rules should be tightened to ensure that highly-paid partners at consultancies, accountants and law firms cannot circumvent the spirit of the legislation, a parliamentary committee told the government on Wednesday.

FILE PHOTO: Workers are seen in office windows in the financial district of Canary Wharf in London, Britain, November 3, 2015. REUTERS/Kevin Coombs/File Photo

The cross-party Treasury Committee said in its Women in Finance report it is “outrageous” to omit partners’ remuneration from the data. The report was published after an inquiry that began last October into how women are represented and progress in finance.

Hoping to highlight gender discrimination and force companies into action, the government announced new rules last year that order firms with 250 or more employees to publish the difference between the average pay of male and female staff every year.

However, although partners at professional services companies have a similar status to senior executives, they can be excluded from pay gap calculations because they are considered business owners rather than employees.

“Omitting partners’ remuneration could reduce the gender pay gap for these firms, rendering the reported figures disingenuous,” the committee said in the report.

“The committee agrees with (British junior finance minister) John Glen that it is ‘outrageous’ that firms are circumventing the spirit of the gender pay gap legislation.”

Some consultancies have reported partner pay in their data. Deloitte and Ernst & Young are among those to have agreed to revise data to include partners, doubling their pay gaps to about 40 percent from an originally-reported near-20 percent.

They have said the figures serve as a stark reminder that there are not enough women in senior roles.

The committee also called on the government to reconsider allowing the subsidiaries of large companies with fewer than 250 employees to be exempt for gender pay gap reporting and consider including linking such data to job roles and corporate function.

In a report that highlighted the cultural and financial benefits of a gender diverse workforce, the committee called on financial services companies to award bonuses on the basis of objective targets, rather than reward tough negotiators.

“The bonus culture in the financial services sector remains a deterrent for women and many are disadvantaged by it,” it said. “The committee believes it would be best practice to move to a system where performance bonuses are assessed against clearly objective and formulaic criteria.”

It also encouraged companies to combat a culture of presenteeism by encouraging flexible working, warned against unconscious bias - by training managers to be objective when considering talent and capability - and ensure women returning from maternity leave are treated equally to their peers.

Banks have reported that on average, men earn 52 percent higher bonuses than women and are paid on average 35 percent more per hour, underscoring how major financial firms still have far fewer female employees in senior roles.

Three quarters of staff working in the top salary quartile at banks in Britain are male, the committee said.

Reporting by Kirstin Ridley; Editing by Matthew Mpoke Bigg

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