Gender pay gap reporting

Sheila Fahy

Towards the end of 2014, Sarah and I discussed what the headlining issues for 2015 would be. Sarah predicted that zero-hour contracts and whistleblowing were topics that required a fundamental rethink to make them fit for purpose, and I was convinced that obesity would continue to evolve into a protected characteristic for discrimination purposes. We were both correct, but what neither of us foresaw was that the controversial gender pay gap provisions, which have lain dormant in the Equality Act for almost five years, would be brought to life in 2015.

These are the almost-forgotten provisions that permit the Government to make regulations requiring employers with more than 250 employees to publish gender pay information, and in particular to declare whether there are any gender pay disparities. Just prior to Parliament being dissolved in preparation for the election, the Liberal Democrats successfully managed to insert an unusual amendment into the Small Business, Enterprise and Employment Bill, which will bring into force these gender pay reporting provisions.

This amendment will require the Government to introduce gender pay reporting regulations by no later than 26 March 2016, and consult as part of the process. This means that whatever the colour of the Government after the election, there is an obligation to make gender pay gap reporting a reality. Realistically, this means that within two years all medium to large employers will need to have carried out an equal pay audit of some description, and will be required to publish the results on a regular basis (probably in the region of every three to five years).

Until the new Government consults, and the draft regulations are published, it is a guessing game as to the level of detail required, and as to what exactly “publication” means. This does not mean employers should do nothing until then, however. Work needs to begin on determining how employees should be categorised and graded if a formal system is not already in place. If there is a suspected pay gap, there is now an opportunity to fix it before such disparity becomes a public issue. Work also needs to begin on how information should be presented in due course and what explanations exist behind any discrepancies in pay.

Blog post by Sheila Fahy and Sarah Henchoz

Comments published on Employment Talk do not necessarily reflect the views of Allen & Overy.

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