Entrepreneur jump through two hands

Last month, Prime Minister David Cameron set out his intention to ‘end the gender pay gap in a generation’, launching a consultation on 14 July.

This consultation asks for views on the Government’s plans to require larger employers (with at least 250 employees) to publish information showing the differences between the average earnings of their male and female employees.

The Equality Act 2010 [1] gave the Government the power to pass regulations requiring large employers to publish pay gap information. This section was, however, not brought into force and the Government focused on voluntary means of encouraging employers to be more transparent about the way they recruit and reward men and women. While the last Government’s ‘Think, Act, Report’ programme attracted hundreds of employers to sign up, only five actually reported their pay gap data.

Even so, more women than ever are now in work according to Office of National Statistics data published in February 2014 and further data published the following November shows that the gender pay gap (at 19.1%) is at the lowest point in history.

The Women on Boards 2015 report shows that there are now no all-male boards in the FTSE 100 and representation of women stands at 23.5% in the FTSE 100.

So, do we need compulsory pay gap reporting? While the unequal pay for men and women was outlawed [2] over forty years ago, the overall pay gap shows that a woman, on average, earns about 80p for every £1 earned by a man. Or, to put it another way, women effectively ‘work for free’ from the beginning of November in each year (marked each year by ‘Equal Pay Day’).

The Government hopes that the plan to ‘cast sunlight’ on the differences between men’s and women’s pay will put pressure on companies to increase women’s wages. While compulsory reporting will only apply to large companies, the increased focus on the gender pay gap and the ensuing publicity will raise the issue for all employers.

It is always a good idea to spot problems before they arise and carrying out an equal pay audit can identify if and where there are any issues. If you involve your legal advisers, the data produced might also be legally privileged, which means that if you face a legal challenge the audit report may not need to be disclosed in the proceedings.

This post was edited by Helen Webster. For more information, email blogs@gateleyplc.com.

[1] Section 78

[2] Equal Pay Act 1970

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