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“Mind the gap”

According to the Office for National Statistics, women on average still earn 19.1 per cent less than men. The Government has decided that the current voluntary duty to report gender pay gaps must now become obligatory in order to rid UK businesses of the inequality in pay.

equal pay

The Government has confirmed that it intends to legislate by mid-2016 to require all private and voluntary sector employers in England, Scotland and Wales with at least 250 employees to publish the gap between average female and male earnings. The legislation will not require employers to act on the data they publish and they will not be required to undertake equal pay audits.

However, the intention behind the compulsory publication of pay gap information is to encourage employers to recognise that there is a pay gap and consider how to eliminate it. It will provide an opportunity for employers to consider other factors behind the pay gap such as motherhood, caring responsibilities and promotion.

Although the legislation itself will not require employers to take action, employees armed with information from their employer that confirms that there is a gender pay gap will perhaps be more likely to pursue equal pay claims.

Government consultation

The Government is consulting on these proposals. The consultation launched on 14 July 2015 to seek views on what gender pay gap information should be published by businesses. The consultation asks whether the information should be the overall difference between the average earnings of men and women as a percentage of men’s earnings, or whether it should be broken down by full-time and part-time employees, or by grade or job type. The consultation will also focus on where and when the information will be published. The consultation closes on 6 September 2015.

If the consultation finds that the overall difference between the average earnings of men and women as a percentage of men’s earnings should be published, there is concern that businesses will be able to disguise any discrepancy between male and female pay under broad headline figures. If employers rely on a median or mean average calculation, the data may conceal problem areas within businesses especially those with large female work forces that have a lack of progression and those with low paid junior men. Some commentators suggest that instead of a single figure for a whole work force, employers should analyse gender pay gap differences by job or grade. There is concern that a lack of detailed analysis will serve to conceal the reasons for the gaps.

What should employers do?

Despite the Government intention to legislate by mid-2016, the consultation states that there will potentially be a delay in enactment to provide businesses with an opportunity to prepare for the implementation. Employers should see this as an opportunity to take a proactive approach to the changes. Employees are able to claim up to six years of back pay (five years in Scotland) if they pursue an equal pay claim. If employers have already identified areas within their businesses where there may be potential gender pay gaps, they should consider taking advice to remedy such gaps to mitigate potential losses and exposure to negative publicity.

Other blogs of interest:

Understanding equal pay audits

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further