The Government has just issued its Consultation paper “Closing the Gender Pay Gap”, in which it outlines plans to implement Section 78 of the Equality Act 2010. This provision has lain dormant for 5 years.

The new provisions will require employers with over 250 employees in the UK, to report on their gender pay gap on a regular basis. The Consultation paper seeks views on exactly how, when and where this reporting should occur.

It raises some fundamental questions, including:

  • Which employees are in scope? The proposals suggest self-employed consultants and apprentices will be included, but genuine agency workers will not.
  • Should an employer report on the overall pay gap figure? Or should that be broken down and should it distinguish between part timers and full timers? Should reporting identify gender pay differences by reference to job grade or job type?
  • In the absence of an organisation having a grading system, what does job type actually mean? And how will it be defined?
  • The suggestion seems to be that the reporting requirements will focus on base pay (excluding over time, bonuses and other important elements of the reward structure).
  • How regularly and where should the report be made? Will businesses be required to report annually or less frequently? Should the information be set out on a company website or in the annual return and/or to HMRC?

Finally there are some important questions about implementation. These include the suggestion that the new requirement should be introduced over a phased period with larger employers (of over 500 employees) having to report first and having later dates by which those employing between 250 and 500 s will have to comply.

So the aim of these new reporting requirements seem to be to shine a light on each organisation’s pay gap and by implication, the gender make up of its workforce; however the reporting and the analysis required as a result, will only be useful and effective in challenging organisation if there is a sufficient level of meaningful data which is reported.

Essential for business (given these provisions will be imposed only on the private and voluntary sector) is the question of how much information, guidance and assistance will be provided by government (one assumes from the Government Equalities Office, perhaps the Equality and Human Rights’ Commission and ACAS) to help with compliance – not just whether this should be voluntary and non-statutory guidance rather than regulation, but how much guidance might be sought from business?

The range of information which could be provided through guidance is broad, from helping employers understand the new obligations, to information which will help address the gender pay gap itself within the work place. However it seems to the writer that the most important guidance and the priority should focus on how employers should calculate the pay gap (the suggestion being that doing this through software means that employers will not have to go so far as to conduct an equal pay audit) and help for employers in their approach to other analysis.

The hrlaw team at Fox Williams will be monitoring progress and responding to the consultation.

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