The government equalities office has just launched a consultation on gender pay gap reporting which will close on 6 September 2015. The reason for this is that the government is committed to introducing regulations that will require companies to publish their gender pay gaps clearly identifying the differences between average pay for males and females.
Research has shown that the UK falls way behind in the league table of worldwide equal pay. Iceland, Finland, Norway and Sweden are the top ranking countries for equality. Four decades on from the Equal Pay Act working women in the UK continue to lose out.
The regulations will only apply to companies in the UK with at least 250 employees so small and medium sized businesses will not be affected. Furthermore public authorities will not be included as they already have broad equality obligations compared to the private sector.
The regulations will be in place by March 2016 but will not take place immediately so that employers have time to prepare for implementation.
The Government appears to be considering the following options in terms of what will be reported:
1. Reporting one overall gender pay gap figure that captures the difference between the average earnings of men and women across the organisation as a percentage of men’s earnings.
2. Reporting separate gender pay gap figures for full-time and part-time employees.
3. Showing the difference in average earnings of men and women by grade or job type.
Highlighting pay differences could expose companies to equal pay claims. There will therefore be the need to put pay decisions in context as there may be fair reasons for these.
A failure to comply with the rules could, ultimately, be treated as an offence, attracting a fine.
In anticipation of the regulations being implement employers should consider the following actions:
• Be proactive – doing nothing is not an option. Understanding your pay arrangements will help you manage and present information meaningfully and in context.
• Review all current pay practices across your organisation in order to understand the differentials which may exist.
• Consider gender pay gaps which exist on a departmental/geographical/functional level and compare these with the composition of your workforce.
• Analyse the rationale behind your current arrangements to identify potential risk areas.
• Consider implementing a job evaluation scheme which will help provide defence for pay gaps
A link to consultation paper can be found at https://www.gov.uk/government/consultations/closing-the-gender-pay-gap
Employers will ultimately have to address gender pay gap issues.