Creating a fairer Britain
19 January 2010
Employers that choose to analyse and report publicly their gender pay gaps will receive limited immunity from investigation, the Equality and Human Rights Commission has announced today.
As part of the Commission's drive to increase gender equality in the workplace, this unprecedented step aims to encourage businesses to adopt voluntary measures to analyse and make public their gender pay gaps.
The Commission has today released proposals outlining the voluntary measures organisations with more than 250 employees can use to publish information on pay differentials between men and women.
The proposals come as a result of a unique consultation process led by the Commission and involving representatives from the CBI, TUC and other stakeholders including business, the voluntary sector, trades unions and equal pay experts. The government has requested the Commission to work with these key stakeholders to develop metrics for reporting and publicly sharing this information on a voluntary basis.
Forty years since the Equal Pay Act women are still on average paid 20.2 per cent less per hour than men (combining full-time and part-time earnings). The gap is wider in the private sector (25.6 per cent) than in the public (18.8 per cent).
According to the Commission’s figures half of all employers view reducing pay discrimination as a high priority, with more than half of employers (57 per cent) analysing or planning to analyse their gender pay gap. However, only nine per cent of employers currently report pay gap information to staff outside of the human resource team. One in five employers actively discourage or forbid discussion of employees’ pay.*
Evidence gathered for the Commission shows that far fewer private sector employers are taking action to close the gender pay gap. The Commission believes that increasing transparency is crucial to addressing the difference between what women and men earn.
Without the transparency offered by mechanisms which enable monitoring of the effect of corporate policies and practices on pay, organisations are at a disadvantage when it comes to tackling the issue.
Transparency also brings a number of benefits in addition to its impact on differences between men’s and women’s pay. These include better quality decisions about reward and remuneration; employee confidence in the reward process and an enhanced corporate reputation.
However, transparency does not mean that an individual has the automatic right to know what another individual earns and would not mean that employers would have to publish details of individual employees’ salaries.
As a result of the consultation, the Commission is proposing a menu of voluntary measures to report on pay by gender, which organisations with more than 250 employees can choose from. These measures include:
The Commission is also offering employers an option to include a narrative of the causes of their organisation’s gender pay gap. This narrative would have to be combined with one or more of the quantitative measures.
Organisations with 250 to 500 employees are encouraged to opt initially to publish information measured by at least one quantitative indicator. Organisation with more than 500 employees would be encouraged to report on two indicators, including a narrative. Within the next two years, these large organisations would be encouraged to move to using at least three indicators, including a narrative.
As an incentive to companies to adopt these reporting measures the Commission is offering a limited degree of immunity from investigation for firms that participate. This immunity will not extend to anti-discrimination cases, but will mean that participating companies are unlikely to receive formal requests from the Commission for further information during the next two years.
The Commission will be producing guidance on these proposals in April 2010. It will begin monitoring the take up of the metrics by large companies later this year, using a process that will allow encouragement and incentives for good practice; and provides a way of refining the proposed measures and methods of reporting with experience. Monitoring will be expanded to companies with between 250 and 500 employees next year.
Trevor Phillips, chair of the Equality and Human Rights Commission said:
“I’m pleased that the Commission has been able to play such a unique role in coming up with some innovative and concrete solutions to begin tackling the issue of the gender pay gap.
“Our research shows that the majority of businesses in the UK realise that they need to address the significant differences between men and women’s pay that still exist 40 years after the Equal Pay Act.
“Transparency is really the first step to addressing the gender pay gap. If an employer doesn’t look at their own gender pay gap, how do they address it? By understanding that they have a gender pay gap problem they can start to take steps to address it. And, of course, it must make good business sense to be rewarding talented staff on merit and results rather than gender.
“Those that take up these measures will receive some immunity from our investigative powers. I hope this incentive combined with the goodwill and commitment shown by our partners so far means that we can deliver high levels of participation on a purely voluntary basis, ensuring that gender pay transparency will become normal business practice.”