While we are still awaiting the final version of the Gender Pay Gap Regulations, the current proposals apply to employers with 250 employees or above. The threshold where the legislation takes effect is incredibly important. When the draft regulations come into force, they will cover 34% of the UK workforce. Rather obviously, perhaps, that means that two thirds of employees will not be affected by these measures. It is not therefore surprising that rumours are circulating that the Government are considering reducing the threshold to 50, a move which would considerably extend the scope and relevance of the Regulations.
The Labour leader, Jeremy Corbyn recently came under fire for his proposals to extend gender pay gap reporting to employers with more than 20 employees. In addition, he advocates broadening the scope of information which employers should publish to cover - ‘equality pay audits detailing pay, grade and hours of every job, alongside data on recognised equality characteristics,’ These audits would seemingly go beyond gender to include disabled workers, ethnic minorities and workers of different ages.
Although some commentators have argued that the 20 threshold is too low and could be unlawful because of the potential for data protection and privacy breaches through identifying employees, this figure must have been considered legitimate by the Scottish Government before they reduced the reporting threshold in the Scottish public sector from 150 to 20 earlier this year. Given the limited nature of the reporting requirements, and the fact that average figures are used, it seems unlikely that individual salaries could be divulged.
In addition, according to the Women and Equalities Committee, the gender pay gap is more pronounced in smaller companies. They also refer to evidence from the EHRC that a number of European countries have adopted a lower threshold.
- In Sweden businesses with 25 or more employees have to conduct an equality action plan every three years, which has contributed to a gender pay gap of only 3% for women working in male dominated occupations
- In Austria companies with more than 150 employees must provide gender pay gap information every other year to employees, detailing the pay gap for each occupational group or pay grade
- In Finland, the Equality Act requires employers with more than 30 staff to produce an equality plan to share with employees every other year. This plan must include a pay survey, reporting the gender pay gap within job roles and pay grades.
The government recently published the public sector gender pay gap regulations, and have continued to use the 250 threshold as the appropriate figure, despite the fact that the specific equality duties apply to organisations with more than 150 employees and may have been a more appropriate choice. Whether the threshold does reduce over time remains to be seen and may depend on the pace of change in the reduction in the national figure as a result of the regulations. Large organisations with HR departments are no doubt the low hanging fruit and the most obvious to pave the way for making changes. Smaller employers with less resources may find it more of a challenge to reduce their GPG. Yet if they are never brought into scope, this will mean that the majority of the workforce are excluded from these provisions.