Large UK businesses will be required to publicise their gender pay gaps, government announces

Out-Law News | 10 Mar 2015 | 11:47 am | 2 min. read

UK businesses with more than 250 employees will be required to publish the difference between the average pay of their male and female employees "within the next 12 months", the Liberal Democrats have announced.

The junior partner in the UK's coalition government has secured the backing of the government for its plans, which will be introduced to the Small Business, Enterprise and Employment Bill during a debate in the House of Lords on Wednesday. The nature of the proposed amendment means that ministers on the government payroll will vote in favour of it.

Jo Swinson, the government's minister for employment relations and equalities, said that the new requirement would "force companies to ask themselves difficult questions about how they are valuing the contribution of women in their workforce and act to address problems". However, employment law expert Linda Jones of Pinsent Masons, the law firm behind, said that the measure seemed to have been "brought in under the radar".

"This change in the law has been agreed by government after it was revealed that only five large employers are reporting on equal pay on a voluntary basis, under the government's 'Think Act Report' scheme," she said.

"This is hardly surprising, as equal pay reporting can be very time-consuming and also employers are worried that they may be opening a can of worms following all of the publicity about the local government equal pay cases. What is more surprising is that this measure, which will potentially have a significant impact on employers, appears to have been brought in under the radar with very little debate or consultation," she said.

Section 78 of the 2010 Equality Act allows the government to make regulations requiring private and voluntary sector employers to publish information about the differences in pay between their male and female employees. However, this legislation has never been enacted. Instead, the government introduced a voluntary 'Think Act Report' scheme in 2011. TAR signatories, which include the likes of Tesco, Bupa and Vodafone, are encouraged but not required to report on gender pay issues.

The gender pay gap narrowed to 9.4% in 2014 according to figures from the Office for National Statistics (ONS), although women who work part-time earn considerably less than men who work part-time. However, only five of the 270 firms that have signed up to Think Act Report have so far chosen to publish their gender pay gap voluntarily.

The Small Business Bill amendment that will be introduced on Wednesday by the Liberal Democrats will enact section 78 of the Equality Act, giving the government the power to set the form and timing of gender pay reports and specify penalties of up to £5,000 for non-compliance. The government will then consult with businesses on what information companies should publish and how often they should do so. As "a bare minimum", this will consist of a full-time gender pay gap, part-time gender pay gap and overall gender pay gap, according to the Liberal Democrats.

Regulations made under section 78 could also require companies to publish the difference between starting salaries for men and women, the difference between average basic pay and total average earnings of men and women broken down by grade and job type, and different levels of incentives and bonuses.

Deputy prime minister Nick Clegg said that the new measures would "shine a light" on company policy.

"Whilst the Liberal Democrats have made real progress in areas like shared parental leave and extending the right to request flexible working, the labour market is still stacked against women," he said. "It's simply not acceptable, in the 21st century, that women on average still receive a smaller pay packet than men."