Commission outlines new gender pay reporting proposals

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.

As part of the commission’s drive to increase gender equality in the workplace, this step is aimed at encouraging organisations to adopt voluntary measures to analyse and make public their gender pay gaps. It has released proposals outlining the voluntary measures organisations with more than 250 employees can use to publish information on pay differentials between men and women.

Forty years since the Equal Pay Act women are still on average paid 20.2% less per hour than men (combining full-time and part-time earnings). The gap is wider in the private sector (25.6%) than on the public (18.8%).

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 include:

  • the single figure difference between the median hourly earnings of men and women
  • the difference between the average basic pay and total average earnings of men and women by grade and job type
  •  the difference between men’s and women’s average starting salaries.

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 initially publish information measured by at least one quantitative indicator. Organisations with more than 500 employees would be encouraged to report on two 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 participating employers are unlikely to receive formal requests 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 employers 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 am pleased 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 the majority of businesses in the UK realise 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 does not look at its own gender pay gap, how does it address it? By understanding it has a gender pay gap problem, it 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.”

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