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A Spotlight On Equal Pay

A Spotlight On Equal Pay

Almost forty years after the Equal Pay Act 1970 made unequal wages unlawful, there continues to be a 19.1% gap in earnings between male and female workers in the UK. On 14 July 2015, the government launched a consultation on plans to accelerate the closing of this gap by introducing rules requiring larger businesses to publish gender pay gap information. The Prime Minister said he wants to “cast sunlight on the discrepancies and create the pressure we need for change, driving women’s wages up”.

The power to make these regulations has been around for five years now. It is contained in section 78 of the Equality Act 2010, but this section was not brought into force with the majority of the act in October 2010. Instead the government favoured a voluntary approach, concerned that the rules would burden large businesses with red tape. However, only five companies, including Tesco, chose to step into the light and publish their pay gap information. The majority of companies chose to stay in the shade.

The government will now look to make reporting mandatory, after the coalition introduced a late amendment the Small Business, Enterprise Act 2015 in March. The amendment compels the Secretary of State to make regulations under section 78 within the next twelve months. Last Tuesday, David Cameron confirmed the government’s intention to press ahead, saying “When my daughters Nancy and Florence start work, I want them to look back at the gender pay gap in the same way we look back at women not voting and not working — as something outdated and wrong that we overcame together.”

The new regulations will apply to private and voluntary sector companies with over 250 employees, while smaller companies and certain public authorities, including the BBC, will be exempt. The mandatory publication of gender pay gap information could have some very significant implications. Not only could negative reports be embarrassing for employers, it could also result in a criminal offence and a penalty of £5,000. Crucially, it could provide employees with the evidence needed to pursue high value discrimination and equal pay claims.

While the regulations appear to be a positive step forward in the development of gender equality, much will depend on exactly what information must be published. Differences in wage levels can exist for many reasons, depending on the industry and organisation, and factors such as bargaining power, experience, education, qualifications, seniority and working patterns. A crude single figure on the pay gap is very unlikely to tell the whole story, and a more nuanced approach is required. The balance will also need to be struck to ensure that the level of detail remains sensible and realistic.

The government is currently inviting responses on what that approach should be. They are looking for particular input on how the pay gap is to be calculated and broken down, the value of a contextual narrative, how frequently reports should be published, implementation costs and the start date. The deadline for feedback is 6 September 2015, so businesses should get any comments in before then to ensure their voice is heard.

The regulations are expected in the first half of 2016 and will shine a spotlight on large companies. Although some smaller businesses will remain in the shadows, the seeds may now have been planted which could lead to the closure of the gender pay gap.

Andrew Clark
Trainee Solicitor

LChalmers