The Government’s new Think, Act, Report publication – Trailblazing Transparency: Mending the Gap sets the scene for the huge legislative changes we will see in the gender pay gap reporting arena this year. Whilst the Report stresses the business benefits to employers who voluntarily publish and tackle their gender pay gaps, new regulations this year will soon force employers to go public with their gender pay gaps.
No longer voluntary – employers forced to publish gender pay gaps
The Government has pledged to “end the gender pay gap in a generation”. It is due to formalise legislation this year that will force larger employers to publish their gender pay gap statistics. By requiring this transparency, the Government hopes that employers will then take steps to address gender pay inequalities.
Where are we now?
We were expecting the Government’s response to its 2015 initial consultation by the end of 2015. It is due out imminently. You can get more information about the first consultation on gender pay gap reporting here.
What we do know is:
- The new measures will require employers with 250+ employees to publish their gender pay gap. This will cover more than 11 million employees across the UK.
- Bonuses, and not just basic pay, will need to be included in gender pay gap calculations.
- The requirement to report will extend to public sector employers as well as those in the private and voluntary sectors.
- Final regulations could be in place by October 2016. Implementation is likely to be delayed or staggered to give businesses time to prepare for the new regime.
What we’re still waiting for
A number of key issues will be addressed in the follow up consultation, including:
- the level of information required, for example whether employers will have to do a breakdown by full and part-time employees or by grade/job.
- whether contextual information to explain pay gap figures will be required/allowed.
- where employers must publish the information, for example on their website.
Why this is important
The Government stresses the benefits and opportunities to business of closing their gender pay gaps, not least the positive impact on many key aspects of business performance.
On the flip side, whilst failure to comply may lead to a potential £5,000 fine, the risk of reputational damage is likely to be very significant. Employers can expect to be compared with their competitors and poor pay gap statistics can affect recruitment, employee satisfaction and even customer loyalty.