Gender pay gap reporting has spurred action by employers

Out-Law News | 14 Nov 2018 | 2:36 pm | 3 min. read

Over 80% of large employers have taken or have planned to take action to address gender pay inequalities as a result of new transparency requirements, according to new research.

The report, by think tank the Institute of Public Policy Research (IPPR), is recommending that large employers begin publishing annual 'Fair Pay Reports', which go beyond the information required by the gender pay gap (GPG) reporting regulations to include ethnicity and disability pay gaps. It also recommends new transparency requirements for smaller firms with 50 or more employees, though with a more limited and less frequent reporting requirement and a transition period to allow time to adjust.

IPPR found strong employer support for gender pay reporting despite initial unease during its research, with four in five respondents saying that the requirements should be maintained. Employers were also willing to consider extending pay gap reporting to other areas including ethnicity, something on which the government is currently consulting.

Gender pay gap reporting expert Helen Corden of Pinsent Masons, the law firm behind, said that it was clear from the findings and recommendations of the report that gender pay gap reporting was "just the beginning" for firms. Pinsent Masons supported the IPPR research.

"Investors, employees and the media will be able to track progress against company action plans and will start asking what companies are doing next in terms of ethnicity and disability reporting and the wider fair pay agenda," she said.

"Those companies wishing to be seen to be leading the way in this area need to start preparing now and owning the issue. For example, consideration needs to be given to how they are going to address the 'fair pay' agenda; and how they are going to deal with increased pressure for pay transparency when discussing the issue of pay has always been, and still is, a taboo subject. By moving beyond gender pay and equal pay to consider fair pay, companies can prepare themselves for future reporting requirements and challenging questions," she said.

The GPG reporting regulations came into force in April 2017. They require private and voluntary sectors with 250 employees or more to publish GPG data for their organisation. Similar requirements apply to public sector employers. The deadline for the first reports, to contain gender pay gap information as at 5 April 2017, was 6 April 2018.

Large UK companies will also be required to publish and justify the ratio of average employee to chief executive pay as part of further transparency requirements, which will come into force on 1 January 2019 subject to parliamentary approval. The government has also begun a call for evidence seeking views from employers about the best approach to ethnicity pay gap reporting, with a view to allowing for "decisive action" on workplace diversity without placing undue burdens on businesses.

The IPPR research is the first comprehensive assessment of the impact of gender pay reporting, highlighting how the regulations have had a positive impact and setting out ideas for how they can be improved and extended. Its report was based on findings from a survey, interviews and a focus group of 60 employers.

The new fair pay reports, as envisaged by the IPPR, would cover gender, ethnicity and disability pay gaps, as well as the ratio of chief executive to average employee pay and the proportion of workers paid below the real Living Wage. The report would also include additional narrative information, setting out the employer's understanding of their pay gaps as well as their plans to tackle them.

IPPR has also recommended that employers publish pay ranges by role internally, and give employees a new right to request comparison data of pay levels and a new collective right to trigger and independent equal pay audit. This would make it easier for employees to uncover and tackle illegal unequal pay, where women are paid less then men for work of equal value.

"The early signs are that gender pay reporting has been a success," said IPPR senior research fellow Joe Dromey. "We should build on this success with a radical extension of pay transparency."

"While transparency will help, it alone will not tackle pay inequality. So alongside this, we need to see action from employers and from government to address the structural drivers of inequality," he said.