MPs have called for more pressure to be placed on law firms to include partners in the reporting of their gender pay gaps. The Treasury Committee of the House of Commons said it was ‘outrageous’ that firms are circumventing the spirit of gender pay gap legislation by leaving out partners’ remuneration.
MPs cited criticism of firms' actions from economic secretary John Glen and said that chancellor Philip Hammond should become ‘equally vociferous’ on the issue.
In its unanimously-agreed report also calling for the reform of bonus negotiations and promotion of flexible working, MPs recommended that the government amends guidance on reporting the gender pay gap. All companies with more than 250 employees were required to report details of the gap as of April, although some firms have opted not to include partners on the grounds that equity sharers are not employees.
The committee report said: 'For many large professional services firms that are partnerships, partners have a similar status to senior executives and should therefore be included in gender pay gap calculations. Omitting partners’ remuneration could reduce the gender pay gap for these firms, rendering the reported figures disingenuous.'
Clifford Chance and Linklaters have chosen to include partners in their gender pay gap report, with two firms, Pinsent Masons and Norton Rose Fulbright, have offered comparisons with partners based on ‘salary and bonus’.
Allen & Overy did not include partners’ compensation in calculations for its first report, based on data to 5 April 2017. The magic circle firm confirmed this week that it is working on a report for 2017/18 which will include information on partners and will be published in September.
Elsewhere in its report, the Treasury Committee found culture is the ‘overwhelming reason’ for women not wanting to get involved at the senior levels of the financial sector, which becomes a self-reinforcing barrier.
The 'alpha-male' culture in some organisations, said the report, was evident in bonus negotiations, where it was perceived that men could argue more forcefully for bonuses than women.
Chair Nicky Morgan said: ’The next step must be for firms to set out how they will abolish their gender pay gap and support the progression of women. Firms should focus on changing the culture in financial services firms, which remains a deterrent for women, especially the bonus culture.
‘Firms should also encourage flexible working, promote returner schemes for women on maternity leave, and re-examine their recruitment and promotion policies to eliminate unconscious bias – people recruiting in the own image – to avoid both group think and potential applicants being deterred.’