UK: Consultation on gender pay reporting requirements

The Government Equalities Office has published an initial consultation paper on the proposal to require companies to publish pay information to show whether there are differences between the pay of their male and female employees.

Under section 147 of the Small Business, Enterprise and Employment Act 2015, regulations must be made under section 78 of the Equality Act 2010 to require companies with at least 250 employees to publish gender pay information. The regulations must be made no later than 25 March 2016. There will then be a period for employers to prepare, before the rules are brought into force.

The Government Equalities Office’s consultation paper considers the issues to be addressed in the regulations, but no draft regulations have yet been published.

The consultation paper contains information about the gender pay gap, its causes, the progress that has been made so far and ongoing work in this area. It asks for feedback on, among other things:

• whether publication of gender pay information will encourage employers to take action that will help close the pay gap, whether there are any associated risks or unintended consequences, and whether there is anything that warrants dropping or modifying section 78;
• when the obligation should come into force (by reference to a specific date such as 1 January, 6 April or 1 October, or by reference to a company’s year-end) and whether it should be phased in, perhaps for employers with between 250 and 500 staff;
• where information should be published (for example, on the company’s website);
• how frequently it should be published (the suggestions are every 1, 2 or 3 years);
• how easy it would be for employers to publish the different levels of information requirement being considered (one overall figure for their workforce, separate figures for full and part-time employees, or figures broken down by grade/job type);
• whether there should be an option or obligation to include contextual information about the figures to explain any pay gap and set out remedial action the employer intends to take (although there is no obligation to take any); and
• whether the obligation should apply to all companies with at least 250 employees (which suggests that a higher threshold may be considered, although this seems contrary to recent Government announcements referring to the 250 employee threshold); the definition of “employee” will cover workers “under a contract of employment, contract of apprenticeship or a contract personally to do work”.

Responses are requested by 6 September 2015. The consultation paper is available here.

Publication of gender pay gap information is likely to increase the risk of equal pay claims or reputational damage. Larger employers may therefore wish to audit their position now, preferably ensuring any documents are created for the purposes of taking legal advice so as to benefit from legal advice privilege protection from disclosure. Where disparities are evident, employers should consider whether steps can be taken to address this ahead of the regulations coming into force.