The new requirement could open businesses up to increased litigation, employment lawyers have warned, while critics are angered by a delay to the plans' imposition.
Under the new plans, announced today by women and equalities minister Nicky Morgan, companies of over 250 people will be required to reveal the amount being paid in salaries and bonuses to men and women. A league table will be established, ranking the firms by pay gap and employers will be required to publish details of the gap on their websites.
But, women will have to wait until 2018 to discover how their employer performs, a caveat that has angered women’s groups and trade unions.
Sophie Walker, leader of the Women’s Equality Party said that the proposals lack ambition. She said, “The plan to start introducing gender pay league tables in 2018 means we will have to wait another two years until we can see only a little bit of what’s going on inside Britain’s companies.”
Instead, she recommended “a clear plan that requires immediate action”. Companies should “show full transparency on pay, status and hours worked – plus retention before and after parental leave”
Data should be broken down not only by gender but by ethnicity and disability, she said.
ICAEW also expressed disappointment for the delay. Sharon Gunn, commercial executive director said, “Disclosure is the first step to acknowledging a problem, and then, vitally, dealing with it.”
The institute also encouraged businesses to follow the example of large accounting firms like PwC and Deloitte which have already “put their head above the parapet”.
She said, “Top firms have already disclosed their gender pay gap and initiatives to develop talented women and make their workplace more inclusive and agile. Businesses need to measure the success of their leaders by how well they support diversity and inclusion.”
However, the two year gap is not, in fact, the grace period it seems, argues Heidi Watson, employment partner at law firm Clyde & Co. Businesses will need to get their data in order before April 2017, ahead of publication the following year.
Paying men and women differently for the same job is illegal under the Equal Pay Act, but with recent ONS estimates putting the total gap as high as 19.2%, there are likely to be examples of discrimination.
And, Watson added, the process will be complex, with a real risk for companies carrying out an audit of their employment data that they may create evidence that could be used in a tribunal claim against them.
Although the data is most likely to highlight the disparity caused by a lack of women in senior positions in big firms, she said, "without necessarily revealing a discrimination or an equal pay claim”, in trying to complete these reports, companies may well create a spreadsheet - for example -that may reveal actual discrimination.
“Employees could through litigation get access to that information,” she said. “It may well raise more employee grievances, and embolden the female workforce to question whether they are being appropriately treated if the data is showing a gap.”
The Institute of Directors cast doubt, however, over whether the plans would really help to improve the position of women in the workplace. Seamus Nevin, the IoD's head of employment and skills policy argued that the pay gap is "not because businesses are paying men and women different amounts for the same work, something which is already illegal in the UK". Businesses on their own, he claimed, do not have the power to resolve the issue.
He said, "The problem with reducing these complexities to a single number and producing league tables is that it will scapegoat employers for a gap which they, by themselves, have no control over and it will do little to address the underlying problems. Encouraging more women into traditionally male-dominated professions, more female role models, and better recruitment practices, would be much more effective than the blunt instrument of a simplistic league table and naming and shaming."Carolyn Fairbain, the CBI director general also questioned the use of league tables, which could, she said, be used to “name and shame” firms.
“Data will only be able to present a partial picture, particularly given factors such as the mix of part-time and full working and sectoral differences. Where reporting can be useful is as a prompt for companies to ask the right questions about how they can eradicate the gender pay gap.”
She urged the government to work closely with businesses to ensure that the new legislation helps close the pay gap, without becoming a box-ticking exercise.
The government last week announced that Sir Philip Hampton would lead a new review designed to increase representation of women in the executive level of business, after Lord Davies successfully achieved his target of 25% women on boards. Yesterday, a survey published by Glassdoor argued that women are unlikely to apply to a company where they believe there is a gender pay gap.