REBA’s Inside Track: The pay gap implications of flexible working

While we get excited about the potential of working anywhere to schedules that suit individual needs, and of measuring employee productivity by output and not input, a wary eye needs to be kept on pay data and where gaps might be opening up along diversity, equality and inclusion (DEI) lines.

At REBA’s gender health breakfast, supported by AXA Health, the very first audience question on our discussion about fertility in the workplace, was about the pay and pension gaps that arise for those who take parental leave and shift to flexible working to care for children. It has been so conventional for so long that it is taken for granted that parents, usually mothers, will take a substantial hit to their lifetime earnings and savings when changing working patterns in order to have and look after children. But now reward professionals are querying this accepting attitude that leads to potential inequality. Ideas such as pension top ups during maternity leave, fast track career and training programmes when parents return to work, through to more flexibility in hours and measurements on outputs rather than hours worked are being discussed.

So, I was not completely surprised, when a broader DEI issue around flexible working was raised during REBA’s webinar on financial wellbeing, held in partnership with nudge. The panellists raised the red flag on groups of employees that may inadvertently be disadvantaging themselves by embracing more flexible working without a considered conversation about the pay and pensions implications.

Those under more pressure to perform caring responsibilities (perhaps because of the difficulties of getting state support for elderly relatives), some disabled employees who find it easier to work from home, as well as other groups of employees, may be disproportionately disadvantaged when adopting new working patterns. Employers that care about inclusivity and fairness are keeping a close eye on any pay gap implications based on gender, ethnicity, age and so on, and whether there are benefits that can be used to support changing needs.

It is such good news that many employers are moving away from old patterns of working that are not flexible enough to suit all workers, and instead are enthusiastic about embracing the technology we have at our disposal in the 21st century to broaden the talent pool. In the process, they are able to employ people from a wider variety of lived experiences which is beneficial for creativity, resilience and sustainability of organisations.

But if we don’t also think differently about how to reward and offer benefits in the face of these changes, we risk going backwards on diversity, missing out on great talent and increasing pay and pensions gaps.

The author is Debi O’Donovan, director and co-founder at REBA.