Gender Pay Gap Information Regulations: Long on information, short on action

Today the government has taken a small step to narrow the gap with new reporting regulations.  We’re pushing for that first step to be followed by some of the bigger steps that will be needed to eliminate the gap altogether.

The Gender Pay Gap Information Regulations that come into force today mean that all employers with 250 or more employees will have to publish information about how large the pay gap is between their male and female employees.  This is a welcome step and might encourage employers to think about the ramifications of the gender pay gap in their organisation, but it falls well short of requiring employers to take the action which is needed to eliminate the gender pay gap.

The new regulations should lead to greater transparency about the gender pay gap at larger organisations.  Employers will be required to publish information relating to:

• the differences in pay rates between male and female employees (including bonus pay)
• the proportion of men and women receiving a bonus; and
• the proportion of men and women in the lowest and highest pay quartiles in the organisation

So, what is missing from the Regulations?  Most concerning are the following omissions:

• An employer is not required to include an explanation to accompany the information they publish or an action plan setting out how they intend to narrow any gender pay gap in their organisations.
• There is no sanction for an employer who chooses to break the law by not complying with the regulations.

We could learn from the Northern Irish gender pay gap regulations, which should be in place by July 2017.  The Northern Irish Employment Act 2016 has indicated that the Northern Irish regulations should make provision for a fine of up to £5000 per employee, for an employer who doesn’t comply with reporting requirements.  An equivalent sanction in the GB regulations would see non-compliant employers fined up to £1.25 million, a meaningful deterrent which would improve compliance.

In Great Britain, however, employers could choose to take no action to narrow the gender pay gap and still comply with the legislation.  At worst, they can break the law and not be punished for doing so.  This is where unions can continue to play a pivotal role in narrowing the gender pay gap.  The newly published information may prove to be useful to unions who can use the information in their negotiations with employers.  Unions can fill the gaps in the legislation and work with employers to identify the causes of the gender pay gap and develop strategies to eliminate the gap.

Gender pay gap reporting is not a panacea which will eliminate the problem.  There are multiple causes of the gender pay gap, which require multiple solutions.  That is why the TUC is calling for more ambitious action to be taken.  We would like to see sector level bargaining which would enable unions and employers to negotiate on pay levels in low paid sectors where women are disproportionately represented, such as social care, cleaning and catering.  We also need systemic reform to the careers guidance programme, leading to changes which would see young women encouraged into jobs in well paid sectors that have traditionally been dominated by men.

Incidentally, Iceland’s parliament has today presented a bill that would require public and private businesses to prove they offer equal pay, for work of equal value, to employees.  Companies who don’t comply would be fined.

Iceland ranks first on the World Economic Forum’s 2015 global gender gap index (The UK is in 20^th position).  If the country at the top of the leader board is taking such steps and has acknowledged the scale of reform that is needed, it highlights just how much further the UK has to travel.