Preparing for gender pay reporting

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Under current proposals, private and voluntary sector employers with over 250 employees will be required to publish details of their gender pay gap on their websites. This may come into force as early as April next year and it is likely that the requirement will be rolled out to smaller employers over time as the government aims to close the gender pay gap within ‘a generation’. Gender is undoubtedly on the agenda and we look at what employers can be doing to prepare.

Despite the fact that equal pay law has existed in the UK since 1970, there is undisputed evidence of a gender pay gap in the UK. The gap is relatively narrow in the 18-39 year age group but, according to a recent survey, widens to 13.6% for employees aged 40-49 and 17.6% for employees aged 50-59. The gap also increases depending on seniority and the difference in pay between high-earning men and women is up to 20%. The government has stated its intention to eradicate this pay gap ‘within a generation’ and gender pay reporting is the first of many likely measures aimed at achieving this.

What will employers have to report?

The proposal (which has formed the basis of a recent public consultation) is that employers with over 250 staff will have to report one overall gender pay gap figure showing the difference between average earnings between male and female employees. Some organisations may wish to provide further information to provide more context. For example, the figures might be broken down by reference to full and part time employees or grade/job type and geographical location.

What are the consequences of non-compliance?

Failure to comply with the duty will be a criminal offence and it goes without saying that simply failing to provide the gender pay details would risk reputational damage. Where the figure shows a significant gender pay gap employers will be under pressure to justify this and take remedial action. Unions and no-win/no-fee firms will be looking for potential claims. Companies involved in public procurement will need to be fully compliant.

What can be done to prepare?

  • Conduct a gender pay audit to identify areas where there is a pay differential. If you can break the audit down into work types, seniority and age groups it will provide a more nuanced picture than a single average figure.
  • Make sure the audit covers benefits and bonus payments as well as just basic pay as these are also areas where inequalities exist.
  • In order to be fully effective, the audit should look at the cause as well as the symptoms so, if there is a pay gap in a particular part of the workforce, consider the factors behind this and whether anything can be done to redress the balance. It may be that there are lawful factors behind any pay gaps and the audit should address this too.
  • Bear in mind that the contents of the audit will be disclosable in any litigation so consider carrying it out via your legal advisers to benefit from legal professional privilege.

We have fewer than 250 staff. Should we be doing anything?

Such employers will not be required to publish their pay gap under the new law. They may, however, wish to look at their own gender pay profile because given the current political climate, it is likely that the government will extend the duty to smaller employers over time. Indeed, the Scottish government has already announced plans to extend the duty to publish gender pay gap information to public bodies with more than 20 employees. Moreover, Unions and no win-no fee firms will be on the look-out for potential equal pay claims arising from gender pay differentials regardless of workforce size so smaller employers are not immune from claims.

If you would like assistance with carrying out a gender pay audit or further advice on this topic please contact Andrew Rayment or David Smedley.