Mind the gap: mandatory gender pay gap reporting coming soon

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It is reported by the Office for National Statistics that on average a woman earns around 80 pence for every £1 earned by a man. Figures revealing this discrepancy in pay have not been forthcoming by businesses despite a voluntary initiative being introduced in 2014. This has led to the government launching a consultation to introduce mandatory gender pay gap reporting for certain businesses through forthcoming regulations.

Background

The issue of discrepancy in pay between men and women is ongoing, which different governments have considered. In 2010, the Labour Party discussed the option of introducing rules requiring businesses with 250+ employees to publish information showing difference in pay between men and women. This was not carried forward and instead a voluntary scheme of gender reporting known as Think, Act, Report was launched. Despite 250 companies signing up to it, it did not result in successful disclosure as it was later reported that only four companies did publish the information required.

Under the coalition government, the issue of the gender pay gap was dealt with through the introduction of sanctions enabling employment tribunals to impose an equal pay audit and to publish those results for any employer found to have breached equal pay legislation.

The introduction of mandatory gender pay gap reporting is a new commitment by the current government for which a consultation was launched.

Proposal

The government has the power under the Equality Act 2010 to make regulations that require employers to publish information relating to the pay of employees for the purpose of showing if there are differences in pay between male and female employees. While this is yet to be debated in Parliament, it has already been indicated that it is likely to require those businesses and voluntary organisations with at least 250 employees to publish information about the pay of male and female employees.

The information it is suggested in the consultation could be presented in different ways including:

  • Calculating an overall gender pay gap figure;
  • Calculating separate gender pay gap figures for full time and part-time employees; or
  • Showing the difference in average earnings according to grade or job type.

Contextual information in the form of narrative could also be a requirement, which the government may include in the regulations or in non-statutory guidance.

While the UK is not alone in continuing to see a gender pay gap, this issue has been tackled in a similar way in other European countries. In Scandinavian countries a range of measures exist including employers required to produce action plans for equal pay which include information on gender pay gaps within job roles and pay grades.

Impact

With the consultation only recently closing, it is unlikely that the mandatory reporting requirement will come into force soon. At this stage it is also not clear whether there will be financial penalties for non-compliance. However, there is an incentive in preparing early for this change and complying once the rules come into force so to avert the risk of being singled out for having a large pay gap and potentially non-compliance, which may result in reputational damage.

At this stage businesses and voluntary organisations with 250+ employees in particular should consider their internal policies and processes currently in use when setting wages and whether any gaps exist. It is also advisable to consider whether data is already available to enable compliance once the regulations come into force or how such data could be collated.

Currently it is not clear what the content of the regulations will look like but we will provide further details as available. In the meantime, if you have any questions relating to mandatory gender pay gap reporting or any other employment law matter, please contact us on 0800 321 3258.

Nat Avdiu

About Nat Avdiu

Nat Avdiu is a Paralegal in the Contracts and Projects team at Forbes Solicitors. Nat provides updates for clients on a range of issues including: governance, data protection and freedom of information, procurement and charity law.
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