New measures will come into force in 2016 requiring employers with at least 250 employees to publish information about their gender pay gap.

These powers are contained in the Equality Act 2010 but have not yet been brought into force.

Instead, a voluntary approach has been favoured, unless a company has had an equal pay finding against it. The voluntary approach has had minimal uptake amongst employers and under the new rules, reporting will become mandatory.

What does this mean for your business?

If you have 250 or more employees you will soon be required to carry out an equal pay review and publish ‘gender pay gap’ details. It is not clear what exactly employers will be required to publish – it may be they are required to disclose a single, overall gender pay gap, or alternatively a more detailed breakdown across an organisation (e.g. by grade/job or full-time/part-time roles). It is likely that employers will be able to provide additional context to the figures in supporting commentary. Reports may require to be published for instance on the company website.

When will the changes take place?

Although the Regulations will be published this year, implementation is likely to be phased providing companies with extra time to prepare and the consultation paper suggests that companies with over 500 employees may be required to publish their pay gap before smaller employers. It is likely to be 2017 before the changes fully take effect.

Positives:

The changes are regarded as a positive step for diversity, will likely lead to increased transparency and will be a welcome development for employees.

Negatives:

Potential significant implications for companies including reputational damage and negative publicity, disclosure of sensitive financial data, negative impact on employee attraction/engagement/retention, and risk of employee claims for equal pay potentially going back over six years.

Penalty:

The proposed penalty for non-compliance with the new measures is a fine of up to £5,000. However, the associated negative publicity and employment relations risks could be far more damaging.

What should business be doing now:

Early planning is vital to ensure your business is ready for the new rules and the scale of administrative work required should not be under-estimated. As implementation will be gradual there is an opportunity to prepare for the changes in advance and potentially minimise negative business impact by putting an equal pay plan in place.

If you would like further information on the Gender pay gap or any other employment issues please contact Ann Frances Cooney, Senior Associate, Employment on 0141 574 2312 or AFCooney@hbjgateley.com