The Equality and Human Rights Commission (“EHRC”) is consulting on ways to measure and report on the gender pay gap in private and voluntary sectors on a voluntary basis – new powers to compel reporting from 2013 appear in the Equality Bill.
Despite the introduction of equal pay legislation nearly 40 years ago, the private sector as a whole has a gender pay gap of 21.7% for full-time workers. In the financial sector the gender pay gap is up to 60% in annual gross pay and 79% in annual bonus pay. The EHRC believes that equal pay legislation has failed to eliminate inequalities in pay because it does not address causes such as educational background and social norms regarding the type of work women and men should undertake. However the EHRC believes that the first step to addressing these issues is to measure the gap at an organisational level.
EHRC would prefer private and voluntary sector employers to report on a voluntary basis. However, the Equality Bill contains a reserve power to compel reporting on gender pay by non-public sector employers with at least 250 employees if insufficient progress has been made on a voluntary basis by 2013.
The consultation closes on 28th October 2009.
Large employers may have to accept some form of compulsory gender pay gap reporting within the next 5 years. While it is recognised that there are social factors outside the control of employers that contribute significantly to the gender pay gap in the workforce as a whole, greater transparency at an organisational level may well to lead to a rise in equal pay claims. Employers have a window to address any anomalies in their pay structure before reporting becomes mandatory.