This week the Government confirmed it will issue regulations requiring employers who have 250 or more employees to publish gender pay information. This blog explores the impact for employers.
The Government has now confirmed its intention to legislate under section 78 of the Equality Act 2010 which gives the Government power to issue regulations requiring employers who have 250 or more employees to publish gender pay information. On 14 July 2015, the Government published a consultation paper on the details of the regulations to be made under this section (‘Closing the Gender Pay Gap’).
The consultation paper indicates that the new regulations will require larger private and voluntary sector employers in Great Britain with at least 250 employees to publish information about the difference in pay between male and female employees. For the purpose of these regulations, a person will be an ‘employee’ if they are employed under a contract of employment, a contract of apprenticeship or a contract personally to do work.
The paper asks for views on what the new regulations should look like and how they should operate. Specifically, some of the noteworthy questions that have been raised in the paper are as follows:
- What level of detail of gender pay gap information should be required from employers. Should a general overall figure be provided (the overall difference between the average earnings of men and women as a percentage of men’s earnings), or should the gender pay gap figure be broken down by grade or job type, or by full-time and part-time employees;
- Whether the regulations should specify where the employer must publish its pay information, for example, in a prominent place on its public website
- Should the gender pay gap figures be accompanied by contextual narrative, explaining any pay gaps and setting out what remedial action the employer intends to take. The paper also asks whether the provision of this narrative should be set out in the regulations or whether the provision of additional information should be voluntary
- How often employers should be required to publish gender pay gap information. Under section 78 of the Equality Act 2010, the most frequently that employers can be required to publish this information is annually. However, the paper also suggests this could be biennially or triennially
- The paper also asks for commentary on what help the Government can provide to support employers. Suggestions for such help include providing access to software that will help employers calculate their organisation’s gender pay gap, or helping employers with the analysis of figures.
The consultation on the proposals for the regulations closes on 6 September 2015.
Practical Points for Employers
The consultation paper gives employers a window into how the regulations may look.
The paper confirms that qualifying employers will need to publish information on their gender pay gap. However, the information employers are required to provide could be more than just the provision of a single figure. Employers may need to provide information of a level of granularity over and above an overall general pay gap figure. Employers may also need to provide accompanying information contextualising the figures. If this is the case, it could increase the cost and time commitment for employers.
Additionally, employers may be required to report these figures annually and in a very public manner. Depending on the figures, publication on the employer’s public website in a prominent place may leave employers open to criticism and claims, and therefore employers should consider that action may need to be taken to mitigate any negative publicity, or the risk of claims.
However, although the regulations will require publication of pay information, following this publication, it does not look as if there will be a positive obligation on employers to take action to rectify any issues. Rather, the Government anticipates that the “comparative” factor will encourage employers to tackle any gender pay gap issues.
Although employers should be reassured that these regulations do not require businesses to undertake a detailed pay audit. As we have previously reported, such an audit would require employers to undertake a company-wide audit to assess where men and women are doing similar work or work of similar value, and close any pay gap between them. The requirement to undertake an audit would be far more burdensome and would create larger administrative costs for employers.
What Can Employers Do Now?
Employers should start to seriously consider equal pay issues, as it is anticipated that the regulations will be laid down in the beginning of 2016. Although this seems soon, the Government proposes that commencement of the regulations is delayed to give businesses an opportunity to prepare for implementation.
Therefore, it may be useful for employers to consider how an assessment of gender pay information could be undertaken and whether this should be done in advance of the publication requirements in order that any issues can be addressed in private. It may be better to remedy any issues now rather than wait and take action when shamed by the requirements of the new regulations.