250 or more employees? Publishing gender pay gap information is to become mandatory
Legislation passed before the general election committed the government to making new regulations on gender pay gap reporting. The government has now launched a consultation on the detail of these regulations.
Who will this apply to?
Employers in the private and voluntary sectors with 250 or more employees will need to publish information showing differences in pay between men and women. Under the current plans, businesses with less than 250 employees will be exempt.
Equal pay laws, which make it unlawful to pay men and women differently for the same job, have been around in the UK for over 40 years. However, there continues to be a significant gap between the average earnings of men and women. Even although an employer is complying with equal pay laws, it may still find that it has a large pay gap, perhaps because it has a large number of female workers in traditionally low-paid roles.
Mandatory gender pay gap reporting is intended to help reduce the pay gap. The last government introduced voluntary reporting via the Think, Act, Report scheme. However, despite over 250 companies signing up to the scheme, only five actually published gender pay gap information.
When will we need to publish our report?
The new regulations will be made in the first half of 2016, but employers will be given time after this (perhaps a further 12 months, depending on the consultation outcome) before they need to publish a report.
What will we need to publish and how often?
The government consultation asks for views on:
- What information should employers have to publish? For example, should this be the overall difference between average earnings of men and women as a percentage of men’s earnings; or should it be broken down by full-time and part-time employees; or by grade or job type?
- Should employers have to provide additional information, explaining pay gaps and setting out proposed remedial action?
- How often should employers have to publish information? This will be annually at most, but could be less frequent, depending on the consultation responses.
What could this mean for us?
The government argues that publication of a gender pay gap can ultimately increase employee confidence in the remuneration process and enhance an employer’s corporate reputation. It asserts that peer pressure will drive employers to tackle inequalities. Some of your concerns, however, might include:
- Additional costs carrying out a pay review;
- Your pay practices will be open to scrutiny;
- Any pay differential could result in:
- Negative publicity and reputational damage;
- Adverse employee relations;
- Impact on employee attraction and retention;
- Adverse impact on procurement;
- Workers identifying disparities, leading to equal pay and discrimination claims.
- How the legislation will be enforced is yet to be finalised, but the government has power to set a fine of up to £5,000 for failure to publish the required information.
Do we need to do anything now?
Reviewing your pay practices will help you identify any problems in good time. You can then decide whether you want to make any changes and, if so, how you will go about this, before publication becomes mandatory. However, this has to be balanced against the risk of creating material that might need to be disclosed in litigation before reporting becomes mandatory.
If you want to contribute to the consultation, click on this link and respond before 6 September 2015: you may be able to help shape the detail of the new legislation.
How can Brodies help?
The employment team at Brodies has significant experience of dealing with a range of issues that arise in the context of equal pay and can support you in reviewing current pay structures, policies and incentives with a focus on risk assessment.
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