The obligation for employers of 250 or more employees to report on the gender pay gap is scheduled to become law in October 2016, with the first of the submitted data to be published by April 2018.
As the national gender pay gap hovers around 19 per cent, many employers are likely to be disclosing a gender-related pay discrepancy, which is disappointing given over 40 years have passed since equal pay was mandated in the UK. But what happens next? Will this new law achieve the Prime Minister’s aim of closing the gender pay gap within a generation?
Fundamentally, any step in respect of gender pay equality is a step in the right direction. The new legislation is recognition from the government that more needs to be done, as well as a tacit acceptance that the voluntary reporting regime (‘Think, Act, Report’) did not go far enough. The new regulations have been criticised because there is no legal sanction for disclosing a gender pay gap but this is, perhaps, missing the point.
It is important to understand that a gender pay gap is not necessarily indicative of unequal pay within an organisation. There may be many reasons for a gender pay gap, not all of which are within the control of the employer, and not all of which could form the basis of a successful equal pay claim.
Pay data itself will not be exclusively determinative of an equal pay issue: this is just number-crunching, after all.
What should be making employers pause from this point forward – given that the reporting obligations cover bonuses and commission paid from 1 May 2016 – is the ‘why’ of any gender pay gap.
The real force of the new reporting obligations is the explanation, if any, the employer gives as to why there is a gender pay gap within its organisation. The publication (or not) of any explanations may, in fact, be the real driver of the promotion of equal pay in the long run. It is this critical information, after all, that can safeguard an employer against reputational issues, retention and recruitment problems, and successful equal pay claims.
In all likelihood, the ‘naming and shaming’ of employers with a gender pay gap will stand or fall on these justifications. As such, the government may want to see how this works in practice before following through on its stated intention to publish ‘league tables’.
These league tables will be a crude tool, polarising ‘good’ and ‘bad’ employers based only on the numbers and without taking into account the underlying context of the pay discrepancy.
Perhaps fittingly then, any progress towards gender pay equality may depend on a willingness to judge books by more than their covers. Or, in this case, numbers.