In a nutshell
What’s it all about? The government is pushing ahead with a positive commitment to make companies report their gender pay gap – the difference between what they pay male and female employees.
Why should you care? Up until now this was voluntary – and hardly anyone did it. Not complying could in future result in a £5000 fine, plus if the figures don’t look good it could mean negative publicity, reputational damage and possibly equal pay claims.
What do you need to do now? The government is consulting on this move, so get involved if you have a view. Otherwise, you could start looking at your own data in advance of the legislation coming into force.
Get in touch: If you would like to speak to someone about the issues raised, please call contact Scott Milligan or find out more on our employment law page.
The full story
The Conservative Party manifesto in the run up to the General Election contained a commitment to require companies with more than 250 employees to publish the difference between the average pay of their male and female employees.
On 14 July the government issued a consultation document ‘Closing the Gender Pay Gap’, seeking views on the level of gender pay information to be required and the frequency of publication.
The Equality Act 2010 contains the power for the government to make regulations that require private and voluntary companies with more than 250 employees to publish gender pay gap information. This is a step away from the voluntary reporting approach which was favoured until recently, as this has proven to be remarkably unsuccessful, with only five companies since 2011 publishing their gender pay gap information.
As a result the government confirmed that it will legislate under s.78 of the Equality Act 2010.
As well as seeking views on the level of detail that should be required, the consultation asks whether the information should be the overall difference between the average earnings of men and women as a percentage of men’s earnings, or whether it should be broken down by full-time and part-time employees, or by grade or job type.
Other considerations in the consultation include:
- What pay data will employers be required to publish?
- Where will the pay gap need to disclosed?
- When will the regulations come into force?
- When will employers have to publish the gender pay data?
- Will companies be required to publish the information annually?
Given that it is some 45 years since the Equal Pay Act was introduced, mandatory gender pay gap reporting is a positive step and one that can only lead to a transparent and diverse workforce. However companies must also be aware that publishing an adverse gender pay gap could have a number of negative implications for companies including:
- Negative publicity
- Reputational damage
- Employee retention, moral, attraction; and
- Equal pay claims.
Finally, for those companies that do not comply with the gender pay measures there is a penalty of up to £5000 in addition to the potential of associated negative publicity and employment relations.
Get in touch
Employers should be proactive in establishing what is required of them to meet their obligations under the proposed regulations. If you require any help or further information of the impact of these proposed regulations on your business please don’t hesitate to contact one the employment team: