Employers Must Now Declare Gender Pay Gaps
Employers Must Now Declare Gender Pay Gaps
A new legal requirement necessitates that companies with 250 or more employees now have to publish their gender pay gaps within the next year. If employers fail to comply by the April 2018 deadline, they will be contacted by the Equalities and Human Rights Commission.
The gender pay gap is the difference in average pay between men and women, which is calculated by the Office for National Statistics using employees’ median hourly earnings figures. The government puts the figure at 18.1%.
The new rule is “the most significant legal change since the Equal Pay Act”, said Sam Smethers, chief executive at the Fawcett Society, which lobbies for gender equality.
The rules will be enforced by the Equality and Human Rights Commission and requires qualifying companies to provide data about their pay gap, the proportion of male and female employees in different pay bands, their gender bonus gap, and a breakdown of how many women and men get a bonus.
The requirement is expected to affect around 9,000 companies, who collectively employing more than 15 million people.
Companies must publish a snapshot of their employee pay as at April 5th 2017 if they are a private business or charity, or March 31st 2017 if they are an organisation in the public sector. All the data is eventually to be made available on a government database.
(photo credit: London Student Feminists)
Gender gap hits GDP, says government
The government hopes that by making pay disparities a matter of public record, companies will be forced to take measures to eliminate such differences, which it reckons could add £150bn to annual GDP by 2025. A report from McKinsey & Company in 2015 indicated that organisations with highly diverse workforces were 15% more likely to have better financial results than their less diverse peers.
Many employers are unprepared for the new rules
However, a new study by recruitment website Totaljobs indicates a significant number of employers are unprepared for the new rules. The survey of 145 employers found that 82% were not reviewing their gender equality and equal pay policies in light of the new legislation, while 58% did not have complete salary information across roles and gender. More than a third were failing to review remuneration as a guard against gender discrimination.
Separately, a survey of 250 employers by NGA Human Resources reveals that almost a third (29%) of company bosses admitted they did not realise the importance of the gender pay gap and 14% of male respondents said it was not necessary to have a plan in place.
The government has said the new requirements will help employers to identify such shortcomings and take the necessary steps to remedy them.
“Helping women to reach their full potential isn’t only the right thing to do – it makes good economic sense and is good for British business,” said the minister for women and equalities, Justine Greening. “I am proud that the UK is championing gender equality and now those employers that are leading the way will clearly stand out with these requirements,” she added.
Employers holding back data are unlikely to be punished
Furthermore, Ms Greening has said that the government would prefer to “work in partnership” with companies on compliance rather than threatening them with sanctions.
“I think we set a clear expectation of what we want companies to do over the coming 12 months. We’ll keep an open mind about whether we need to go further in terms of regulations and sanctions, but the important thing is to win over hearts and minds,” she said.
The Women’s Equality Party has said that the new rules on their own would not eliminate the pay gap, which the party estimates to be 19%. It fears data could be easy to manipulate and is calling for employers to be required to break down figures by age, ethnicity and disability as well as gender. “Tackling the complexity of the gender pay gap means going much further than the government’s current proposals and businesses should be leading the way,” said the party’s leader, Sophie Walker.
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