Time to start your (gender pay) gap year?

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Time to start your (gender pay) gap year?

02 Sep 2016

In the week when fear-ridden teenagers were opening their results envelopes live on breakfast TV, section 78 of the Equality Act 2010 also came into force – because, while girls continued their reign of outperforming boys in A-level and GCSE results, in the adult world, men maintain their higher pay.

You are already forgiven for not knowing that section 78 is the enabling section for the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016, which are set to come into effect in April 2017. That, though, is where the forgiveness ends. The Regulations will require employers with 250 employees or more to publish six pieces of information in relation to the pay of employees to measure the differences in the pay received by male and female employees.

The purpose of the Regulations is to increase pay transparency, as it is illegal to pay different amounts to men and women doing the same job under the Equality Act 2010. The government believes that the mandatory requirements to publish annual reports and retain gender pay information for three years will lead to employers taking more action to address pay inequality and close the gender pay gap.

The government aim is to close the gender pay gap – which stands at 18% – “in a generation”. Given that equal pay legislation has been in place for over four decades, naming and shaming looks like the next weapon in the (pay) battle of the sexes.

So, in the same way that an increasing number of teenagers are embarking on gap years now their exam results are in, equally, it’s time for employers to think about conducting an equal pay audit.

What are the risks to employers?

The draft Regulations do not contain any specific sanctions for failure to comply with the requirements. That said, employers could face the following risks for non-compliance:

• Potential reputational implications – Non-compliant employers run the risk of attracting negative publicity from a variety of sources; including the government’s potential ‘naming and shaming’ lists following periodic checks; the keen public interest from Trade Unions, employees and the media; and competitors within industry. Such adverse publicity may have an impact on an employer’s business and recruitment.

• Financial implications – Although there is no specific right for an employee to bring a claim because of their employer’s failure to comply with the Regulations, the published information (or lack of) could be used as relevant background evidence for other claims; such as equality of terms claims. Defending such claims can be costly and time-consuming for employers.

Whilst the first publication date (4 April 2018) seems a long way off, the reports will contain data starting 12 months previously. Therefore, it is vital that employers start to prepare now to ensure that they have the appropriate systems in place to report the gender pay gap information.

How can we help your business?

In order to assist employers, we will be looking at the gender pay gap reporting requirements at our HR Breakfast Club on 8 September 2016.

During the session we will also be highlighting steps which can be taken now so that employers can adopt a proactive and progressive approach to tackling gender pay inequality, prior to their gender pay information being published.

The first step for any employer is to understand the extent of any gap in your pay. As employers will be required to report on the pay that is being paid now, there is no time to delay.

We can provide a high level of assistance in any trial runs carried out between now and April 2017. Our external involvement will help employers oversee the reporting process as well as collate and analyse pay information – making the task much less daunting. The results of any trial run carried out with our assistance will be subject to legal professional privilege and, as such, will be kept confidential. We will also provide legal advice on the extent to which your business may be at risk of claims arising from the gender pay gaps, and how to minimise these risks.

You can sign up to our free HR Breakfast Club session here.

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