Indeed, few would have predicted that section 78 of the Equality Act, which provide for compulsory gender pay gap reporting and which have lain dormant since being introduced by Labour in 2010, would be implemented by a Conservative Government. However, this is exactly what the Government announced its intention to do on 14 July this year, on the day that it launched its consultation “Closing the Gender Pay Gap.”
That consultation has recently closed, and it is not yet clear what form of reporting the regulations will require. A range of options, from the simple comparison of the earnings of men and women to gender pay gap figures broken down by grade or job type, have been canvassed.
Although no decision has yet been made by the Government, as a betting man, I would put money on the Government requiring the most basic form of pay gap reporting – a comparison of the earnings of men and women. While the Government itself acknowledges that this measure does not give a true picture as to the reality of an employer’s approach to gender-related pay, the measure is relatively easy for employers to calculate.
Given the views expressed to me by a number of employers that their systems would not allow a more sophisticated form of comparison to be calculated, the most likely outcome is that the Government will go for something that all employers will be able to do and require compulsory publication of a crude comparison of the pay men and women across the entire organisation.
This comparison will, almost inevitably, result in employers reporting a significant gender pay gap as a result of, amongst other factors, employers employing a greater proportion of women in lower paid jobs and a greater proportion of men in higher paid jobs. This is likely to result in employers voluntarily publishing additional information, to the extent that they are able, which sheds a different light on the gender pay gap and which may result in the employer appearing in a much more favourable light.
For example, a more granular comparison under which men and women are compared by reference to job level or grade might show a very different picture in which the gender pay gap is much smaller or is even eliminated.
Whatever the nature of the requirement introduced, the legislation is likely to throw a spotlight on an area which has been bubbling as an issue for many years. It may also result in an increase in the number of equal pay claims made by women in the private sector which have, to date, been few and far between. Equal pay claims have been mainly confined to the public sector.
However, the number of claims being made in the private sector is on the rise and the introduction of compulsory gender pay gap reporting is only likely to accelerate this trend and increase the pressure on employers to address an issue which is right at the top of the political agenda.
Stefan Martin is a partner at Mayer Brown