The government has recently published a consultation paper on its plans to introduce mandatory gender pay gap reporting for large private and voluntary sector employers.
The government hopes that mandatory gender pay gap reporting will help to address the overall gender pay gap in the UK, which, according to the Office for National Statistics, stands at 19.1%.
However, whilst it may be a positive step for diversity, it will likely have a number of significant and potentially costly implications for employers.
This article looks at the consultation proposals, what these mean for employers, and what employers can do to prepare.
Currently, there is no statutory obligation for employers to publish gender pay gap information. This is unless an employer is found by a tribunal to be in breach of equal pay law, in which case they can be ordered to complete an equal pay audit. Employers can voluntarily report their gender pay gaps via the "Think, Act, Report" scheme, but are under no obligation to do so.
The new measures will require employers with at least 250 employees to publish information about the pay of their male and female employees.
However, the details of these new measures – including what, when and how information should be published – are undecided. The government seeks views on what these details should look like in its consultation.
Issues for consideration include:
The consultation is due to close on 6 September 2015. The government has stated that the results will be published in winter 2015, with draft regulations expected to be published in the first half of 2016. However, the consultation paper suggests that there may be a delayed implementation to give employers time to prepare. It may be phased by company size, in a similar way to pensions auto-enrolment.
The introduction of mandatory gender pay gap reporting is likely to be welcomed by employees, leading to increased transparency and impacting positively on diversity.
However, the requirement to carry out and publish gender pay gap reports is likely to have negative implications for employers.
Firstly, all employers will likely encounter costs in complying with the reporting requirements, particularly if new administrative systems are needed in order to generate the required information. Of course, the extent of these costs will depend on the level of information required, which has yet to be decided.
Secondly, but more significantly, those employers publishing a large gender pay gap are likely to experience:
As such, whilst a failure to comply with the new rules will likely be a criminal offence, there are no proposals to require employers to meet any specific goals in respect of their gender pay gap. Instead the driving force for greater pay parity will be the desire to avoid being 'named and shamed,' the results of which are likely to be far more damaging.
To view the consultation click here.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com