The Government is expected to make it mandatory for private and third sector organisations with at least 250 employees to publish an annual report showing their overall gender pay gap – if, of course, one exists. From Amanda Jones, partner and head of the Employment & Pensions team at Maclay Murray & Spens LLP.

Employers will be required to have snapshot of gender pay gap data prepared by 30 April 2017, and publish a report within 12 months of that date. But with no requirement to aggregate subsidiary companies, even many medium-sized firms will escape the net. Meanwhile, earlier drafts of the legislation showed that no financial penalties were expected for those companies that fail to comply, with ‘naming and shaming’ being the only punishment for organisations which chose to ignore the law altogether. 

We have not yet seen the final draft of this legislation, but without strong sanctions to make companies sit up and take action, it is unlikely to have a great effect. In terms of employment law, it will have a limited impact, as firms are under no obligation to tackle any pay gap they reveal and, in particular, it may not produce relevant data to bring tribunal cases against an employer. The gender pay gap is to be shown by calculating mean and median hourly pay over a specified period, and employers will have to publish any ‘gender bonus gap’, being the difference between the average bonus paid to men and women over a 12 month period, as well as the proportions of men and women in receipt of a bonus. But the definition of ‘pay’ is narrow and doesn’t include, for instance, overtime or expenses, and the definition of ‘bonus pay’ also seems ambiguous. There are other aspects of the proposals which are unclear, such as how exactly basic paid hours will be calculated. 

A further criticism is that this law does nothing to address the issues behind the pay gap nationally, which is more to do with occupational segregation than the differences in pay within single organisations. However, at least women will be able to use the information when considering taking up an employment opportunity. Firms which use this opportunity to tackle the gap must beware of serious pitfalls: However, those firms which are already seeking to address pay inequality will take heed of the new law, but must tread carefully. 

For companies where recruitment of the brightest talent is an issue, particularly those in the professional services and financial services sector, who have invested in talent management strategy, being able to advertise their fair treatment of women is increasingly seen as a key differentiator and a way of attracting the best females in their field. “Those firms which, seek to demonstrate best practice or just wish to attract and retain talented skilled female workers, are already seeking to tackle pay inequality, will be keen to report not just on the current situation, but on what they are doing to close the gender equality gap. To do this, they will need to get to the bottom of what is causing the difference between men and women earnings on average, within their organisation. Organisations which develop a strategy to close the gender pay gap, will have to tread very carefully to ensure they do not cross the line from pro-active policy to ‘positive discrimination’. If their policies are found to be discriminating against men – which can become the case if training or advancement opportunities are aimed specifically at women, for example, then that is unlawful and may backfire on the employer.

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