After a long wait, the final version of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 were published on 6 December 2016.
By way of background , in February this year the government released its proposed gender pay gap regulations, which require larger companies to publish details of their gender pay gap: the difference in pay between men and women. The Fawcett Society’s research states that the current overall gap for full time workers is 13.9%. The reasons for the gap are numerous and include:
- Discrimination – even though its unlawful under the Equality Act 2010, some women are still paid less than men for the same work;
- In general, women continue to play a greater role in childcare, as such, many women work part time which can often means less pay and less chance for progression;
- Whilst this is slowly changing, men continue to make up the majority of those in the highest paid and most senior roles.
The Regulations were due to come into effect from October 2016, however they were delayed as the government was still working through the consultation responses. They are now due to come in force on 6 April 2017.
In summary, the Regulations apply to all private sector employers with 250 or more employees (a separate regime is being proposed for public sector employees). Employers must publish the mean and median hourly pay gap between men and women, based on the pay period in April each year. Pay for this purpose includes any bonuses paid in that pay period. The annual bonus gap between men and women must also be published, including the proportion of male and female employees who received a bonus that year. The first calculation date is April 2017 and the data must be published on the employer’s website by April 2018, remaining there for three years.
Back in February we raised concerns that that whilst the regulations are a positive step towards working to eliminate the gender pay gap, the problem is that they have no teeth. Our view following review of the final regulations remains the same. In short, the company is required to report on the gender pay gap, but there are no significant penalties for non-compliance or serious enforcement provisions. Companies are not required to provide a narrative about steps being taken to reduce the pay gap or even be required to take any steps at all. Whilst some companies may be keen to avoid embarrassment or reputational damage caused by differentials in pay between men and women, and will seek to explain it and provide details of how they are tackling it, adverse publicity in itself may not be a deterrent from compliance. “Naming and shaming” may not be deter particularly brazen organisations from either not publishing their statistics or from doing anything about any significant differentials. Of course, another concern is that the regulations only apply to fairly large companies, with over 250 employees.
Having said that, the process is likely to identify companies and industries with a significant gender pay gap and may well assist in providing solutions to closing the gap. In particular, the requirement to disclose bonus differentials may expose the differences between men and women within senior positions and in the boardroom and hopefully create a more open environment to discuss and tackle the issues.