UK Government announces plans to force firms to reveal gender pay gap

by Redmans on February 19, 2016

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In a move announced earlier this year by David Cameron, large companies will in 2018 be forced to disclose whether they are paying men more than women.

Nicky Morgan, the Women and Equalities Minister, made the announcement on Friday 12 February 2016 that the Government would be looking to introduce new rules relating to the gender pay gap over the next two years.

The new rules will only apply to companies with more than 250 employees, so will affect only 8,000 employers in the United Kingdom – the new regulations will, however, require both private companies and voluntary obligations to publish their pay details. These firms will be required to start to take steps to calculate the gender pay gap in their firm from April 2017, with the aim that the results be published in new league tables in April 2018. These league tables are intended to highlight the pay differences between male and female employees and will force businesses to reveal how much they are paying in salaries and, critically, bonuses to male and female staff.

As well as being forced to provide the Government with information on the disparity between the pay of female and male employees, firms will also be compelled to publish their individual gender pay gaps publicly on their websites. Reports will have to produced annually and made public every year from 2018 and senior executives at firms will be expected to review and approve the reports personally.

Under the Equal Pay Act 1970 it is unlawful to pay female and male staff different amounts for doing the same job. However, estimates from the Office for National Statistics state that the gender pay gap currently stands at approximately 19.2% for full- and part-time workers in the UK, meaning that for every pound a male worker makes, female workers earn 20p less.

Making the announcement today, Ms Morgan stated: “In recent years, we’ve seen the best employers make ground-breaking strides in tackling gender inequality. But the job won’t be complete until we see the talents of women and men recognised equally and fairly in every workplace.

“That’s why I’m announcing a raft of measures to support women in their careers, from the classroom to the boardroom, leaving nowhere for gender inequality to hide.”

Ms Morgan’s speech echoes sentiments espoused by David Cameron in a speech in May, when he stated that these rules would “cast sunlight on the discrepancies and create the pressure we need for change, driving women’s wages up.”

Support for the new regulations was forthcoming from the Chartered Management Institute, whose chief executive Ann Francke stated: “Publishing league tables will drive diversity, bringing benefits not just to women but to business. Closing the pay gap will open the talent pipeline, increase management quality and boost productivity.” However, not all feedback relating to the new rules – the Trade Union Congress was critical of the new regulations as not going far enough, and the director-general of the CBI state that league tables should not be used to “name and shame” firms, as data could only give a partial picture.

Chris Hadrill, a specialist employment solicitor at Redmans, commented on the news: “These new regulations should, as David Cameron states, bring a ray of sunlight to the murky area of gender pay disparity; they may also cause a raft of new equal pay claims against large companies once the new league tables are published.”

Redmans Solicitors are specialist employment solicitors in Fulham, Chiswick, Hammersmith and Richmond

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