Mandatory gender pay reporting is coming

The Government has launched a consultation on regulations which will require companies with 250 or more employees to carry out an equal pay review and publish their gender pay gap.

Until now, the government’s power under Section 78 of the Equality Act 2010 (to make regulations requiring mandatory gender pay gap reporting) have not been used.

2016 and 250 are the magic numbers

The new regulations will be enacted in 2016; the finer details of the new requirements are currently subject to a consultation which will conclude in September 2015.

The government are currently considering how the data will be published. Will it involve a single pay gap figure or will there be an entire breakdown of the pay gaps for different roles in the organisation?

Another issue is when employers will be expected to comply with the new measures and release their gender pay gap figures. The government’s consultation paper confirms that the new measures will be introduced in the first half of 2016.  Similar to pensions auto- enrolment, the paper also suggests that compliance with the regulations will be phased in according to company size and to allow smaller employers time to prepare.

The current consultation will also debate where employers should publish their gender pay data; should it be on a register or on their website?

What does this mean for employers?

There is much evidence which appears to show that there is a genuine and continuing gender pay gap in the UK and the new measures may be a step in the right direction for pay equality. However, how the gender pay gap information is presented by an organisation, and how much information is shared, will be crucial in determining whether greater transparency also leads to greater trust between employers and their employees (and prospective employees).

There are clearly risks for organisations as well. If the pay gap is substantial this could lead to reputational damage and harm to recruitment of the best female candidates, as well as negative media attention.  An employer might also receive grievances from existing employees (whether male or female) and possibly even equal pay claims. The regulations will also penalise those employers that do not comply. The proposed fine is £5,000.

What next?

The new regulations will come into force early next year, and companies with 250 or more employees will likely need to publish their figures within 12 months of the regulations coming into force.  The consultation paper suggests that companies with over 500 employees may be required to publish their pay gap before smaller employers. So there is still time for all employers to be proactive about analysing their pay structures, considering the reasons for any gender pay gap and how much information they intend to share, either with their own workforce or the public at large. I consider that one of the key strategic decisions for an organisation is whether to voluntarily publicise more information than the statutory minimum if publication of the statutory minimum data only, would provide a misleading or damaging picture of the organisation’s pay structures.

We will be covering this topic at our upcoming free discrimination masterclass. Click here to book yourself on. We will also blog further on the topic when the consultation is finished and the Government publish the final regulations.