MPs call for gender pay gap rules to be extended

Out-Law News | 02 Aug 2018 | 3:04 pm | 3 min. read

UK employers should be required to publish details of what they are doing to close their gender pay gap (GPG), a committee of MPs has said.

At the moment, employers in the private and voluntary sectors with 250 or more employees are required to publish GPG data for their organisation.

The GPG reports must detail the overall mean and median pay gaps based on gross hourly pay for men and women, expressed as a percentage; as well as their mean and median gender bonus gaps. They are also required to publish the proportion of male and female employees within each quartile of their pay distribution, ordered from lowest to highest pay, as well as the proportion of both men and women that have been paid a bonus in the preceding 12-month period. 

While businesses have been encouraged to also publish a narrative alongside the raw data to help put the data into context, it is not currently a legal requirement to do so.

In a new report, however, the Business, Energy and Industrial Strategy Committee (BEIS) has recommended that employers be required to "provide some narrative reporting alongside their gender pay statistics and an action plan setting out how pay gaps are being and will be addressed, including objectives and targets". 

Employment law expert Helen Corden of Pinsent Masons, the law firm behind Out-Law.com, said: "Whilst many employers have produced supporting narratives and action plans on a voluntary basis, few included specific targets to reduce their pay gap by a certain percentage year on year, or by a specific date. It was felt by many that due to the societal issues impacting upon the gender pay gap within their organisation and the fact that increasing gender representation at different levels was not a quick fix, specific targets would not be helpful and would be difficult to set."

It also called for the existing gender pay gap (GPG) reporting regulations to be extended to bring organisations of 50 employees or more into scope of the reporting requirements.

The report by the BEIS Committee was published after the Government Equalities Office announced that all of the UK employers considered to be in scope of the GPG reporting regulations had published the GPG data. According to the data published, more than three quarters of those employers pay men on average more than women.

"It is really encouraging that all UK employers identified as being in scope of the GPG regulations have published their data," said Corden. "At the April deadline there were a number of companies who failed to report but clearly these have now done so. This evidences the importance that employers place on complying with the regulations – the government has therefore achieved its aim in this regard."

The Government Equalities Office has also published new 'what works' guidance for employers to flag 'effective' and 'promising' actions that those organisations might take themselves to address any GPG in their organisation.

The guidance references potential practices in relation to recruitment, the processes for promotion and in respect of pay negotiation and transparency that could be implemented to help women into better paid jobs. It also identified the potential benefits of offering flexible working and encouraging shared parental leave, among other things.

Corden said: "A number of employers will already be taking steps, such as introducing transparency to pay, promotion and reward processes and requesting gender balanced shortlists. However, the recommendations in relation to assessing candidates on actual tasks they would be expected to perform in the role may be a new consideration for employers as many employers will not be doing this, instead basing selection on interviews alone which involves asking different questions of candidates which may allow unconscious bias to creep in to the process."

"Some employers will also be reluctant to publicise salary ranges on offer for a role for fear of always having to pay the top salary or highlighting that employees may be on different salaries for performing the same roles," she said.

In its report, the BEIS Committee said the government should consult on new rules that would require employers to "collect and report pay gap data in respect of disability and ethnicity", with a view to publication of that information in 2020. It further said the government should be prepared to legislate if "sector representative bodies" fail to "develop and publicise ambitious and stretching long term targets for reducing gender pay gaps" in their sectors.

The committee also called on company boards to introduce 'key performance indicators' for "reducing and eliminating their pay gaps".