The Government has announced that new legislation requiring companies to report on their gender pay gap will include an obligation to provide information on bonuses awarded to both men and women. The chief executive of the Chartered Management Institute, Ann Francke, met this announcement with approval: “One of the biggest drivers of gender pay discrepancy, especially at senior levels, is the bonus gap”. Scrutiny will be placed on the criteria on which bonuses are awarded, to ensure they are fair and equal.
The Equality Act 2010 contains a provision, Section 78, enabling the government to introduce regulations that require employers to publish periodic information setting out any differences in pay between men and women. Although not yet brought into force, the government indicated in July 2015 that it intended to implement Section 78 and issued a consultation document seeking views on various aspects including how the information should be reported and at what intervals.
What does Section 78 require?
The provision, as currently drafted, will apply to companies with more than 250 employees. Although the public sector was expressly excluded, the government’s most recent announcement indicates that it will, in future, be brought within the scope of the reporting requirement.
Section 78 is not much more prescriptive beyond this, leaving it to eagerly awaited regulations to specify the detail. It does, however, state specifically that the reporting requirement will not be more frequently than annually.
Offences for failure to comply will be criminal and attract unlimited fines.
What will happen next?
The consultation on the detail of implementation of Section 78 concluded in September 2015. Originally, the government said it expected regulations implementing Section 78 to be published early in 2016. This latest announcement suggests that it may be sooner. A more detailed proposal is expected on equality issues generally including steps to eliminate all-male boards in FTSE 350 companies.
The tone of this announcement suggests that the government regards equality as one of its main priorities in the workplace and is likely to produce rigid regulations. We will report further when more detailed proposals are published.
If you have any questions or need help in assessing how the new proposals could impact your business, please get in touch.
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