HR news round-up: from the gender pay gap to IR35

This week’s news ranges from early reports on the gender pay gap to concerns that some freelances are choosing not to work due to the complications of the IR35 tax legislation.

 

Median gender pay gap falls slightly

The median gender pay gap decreased slightly to 9.1% in 2023-2024, but almost four out of five companies and public bodies continue to pay men more than women, according to snap analysis of the gender pay gap figures by The Observer.

It says the public sector has a higher gender pay gap of 14.4%, with 87.6% of public sector organisations paying men more. Last year the Guardian put the public sector figure at 15.1% at a similar point in time. So far 10, 523 employers have reported their figures. The deadline was last Thursday, but many employers leave it to the last minute to report or report late.

Other initial analysis has focused on the banking sector, which has traditionally got one of the highest gender pay gaps in the UK, particularly when it comes to investment banking, mainly because of the higher number of men in senior leadership roles.

The gender pay gap at HSBC has fallen slightly from a mean of 45.2% to 43.2%. 51% of employees are women and of this, the majority (62%) are in junior roles. At the snapshot time of reporting [5th April 2023], 30.9% of the senior leadership were women, up 1.4% on 2022. But at Goldman Sachs things are going in the opposite direction, with the mean hourly pay difference rising to 54%, up from 53.2% the previous year.

According to Reuters, the mean pay gap across Morgan Stanley’s UK workforce fell slightly from 40.8% to 40.1%, while Barclays saw a 2.3% narrowing of its mean gender pay gap to 33.6%.

JP Morgan reported a 1.5% fall in its mean pay gap to 26.1% and Standard Chartered’s mean gap fell from 29% to 22%. Reuters says overall that the mean gender pay gap narrowed by 2% among leading banks in the UK.

Among insurers Reuters reports that Aviva’s mean pay gap fell from 24.3% to 21.3%, Abrdn’s fell by 3.9% to 24.8%, but Legal & General’s widened from 20.9% to 21.3%.

‘Law firm associates less likely to aspire to partnership’

Just a quarter of law firm associates aspire to be partners at their firm in the next five years, according to a survey by LexisNexis.

The survey found that nearly half (49%) of leaders had also noticed a decline in the number of associates aspiring to make partner, while the figure rose to 63% for leaders at large firms.

The survey also revealed a difference in attitudes over loyalty between senior leaders and associates. While 75% of associates want to stay in private practice, only 12% plan to leave for other career paths. Work-life balance was cited as the most important factor for associates looking to move. The reluctance to pursue partnership was attributed to a lack of ambition by just 26% of leaders.

Elizabeth Rimmer, chief executive of legal mental health charity LawCare, said: “Junior solicitors are no longer aspiring to be partners. They will likely take one look at the lifestyle of current partners and be put off.”

Many unaware of new Carers Leave Act

Many employers, particularly SMEs, may not be aware of their responsibilities under new legislation that came in last weekend, say experts.

The Carers Leave Act is among a range of new employment laws which came into force on 6th April. These include the right to request flexible working from day one and extended maternity protections.

The Act enables unpaid carers to ask for up to five days’ unpaid leave from their employer and also protects them from dismissal for taking the leave. Employees can take the leave in full or half days, or in a whole block of five days. They must give advance notice that is twice the length of time that needs to be taken. The leave can be used to take care of someone who has a disability, needs care because of old age or has a long term illness of more than three months.

Employment law expert Kate Palmer from Peninsula says many employers she speaks to don’t seem to be aware of it.  She says: “I can honestly say I’ve spoken to many SMEs [small and midsize enterprises] of late who have no idea this is coming in. More awareness is needed, because carers have this right and it’s important they know about it. But also if employers don’t know about it they could absolutely be taken off guard by it and it may create risk for their businesses.”

Call for ban on pension switching initiatives

Workplace pension provider People’s Partnership commissioned the Behavioural Insights Team to conduct an online experiment with more than 5,500 people who hold a UK pension to test how they would respond to invitations to transfer their pension both with and without an incentive. They found that participants were 20% more likely to say that they would transfer their pension once seeing a cashback offer of just £100. That is despite the fact that higher fees charged by the new pension would have left them more than £1,000 worse off after just five years.

The cash incentives were offered through adverts and personal referrals, and those who saw them were 20% less likely to evaluate the offer by looking at the finer details of the terms in the offer, via the FAQs. This made them unable to judge what they were being offered, says People’s Partnership.

It believes the pensions industry needs to provide simple, easy to understand information for members when transferring and is calling for pension switching incentives to be banned because they inhibit people’s likelihood of reading the small print.

Patrick Heath-Lay, CEO, People’s Partnership, said: “This research shows cash incentives bias the pension transfer process in ways that are often harmful as they act as a barrier against people considering what is on offer and whether it is value for money. They are also less likely to read and understand basic details about their new pension, even when these are prominent, and they stand to lose money.

“Healthy competition between pension providers should be based on the quality of pension products, not marketing tricks that exploit flaws in the way people think. We believe this research highlights practices that are contrary to the FCA’s Consumer Duty.”

Read more here.

‘IR35 behind some economic inactivity decisions’

One in 10 freelancers are currently out of work due to the impact of controversial reforms to IR35 tax legislation, according to new research.

A survey of more than 1,300 contractors in highly skilled roles by IPSE (the Association of Independent Professionals and the Self-Employed) found that 21% are not currently working, with half of them attributing this to the impact of reforms to IR35 tax rules.

55% of contractors said they had rejected an offer of work in the past 12 months due to it being deemed ‘inside IR35’ by the client. And 24% said they intend to seek contracts overseas this year to escape the rules.

The survey, run annually by IPSE , tracks the impact of the IR35 changes – known as the ‘off-payroll working’ rules – on contractors. The changes were rolled out first to the public sector and then to the private sector in April 2021. They force employers to make a decision on the often complex issue of employment status and have led to many companies relying on CEST [Check Employment Status for Tax – HMRC’s tool for defining tax status whose accuracy has been questioned], adopting blanket bans on contractors or working with umbrella companies through fear of risk.

Read more here.


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