Government moves closer to requiring firms to publish gender pay gaps

The government is creeping one small step closer to making private sector firms publish their gender pay gaps after women’s minister Harriet Harman refused to rule out the concept last month.

In an exclusive interview with our sister title Personnel Today, Harman said although a new government scheme aimed at enticing firms to work out and publish their pay gap online was voluntary, other laws could allow the government to force employers to measure pay differentials. “We’re asking people to post their pay gap voluntarily, but we have got a backstop in the Companies Act, which means we can make people do it,” she said.

However a Government Equalities Office spokeswoman said such powers would only be used years down the line if a company repeatedly failed to make improvements. So what other steps is the government taking to encourage employers across the private and public sectors to be more open about inequality in the workplace?

Legislative measures

First, the Equality Bill, due to come into effect next year. Probably the most controversial part is the proposal to allow employers to hire candidates specifically from minority groups provided they are equally qualified to individuals from over-represented groups.

The bill will also ban ‘gagging clauses’ so that staff can compare wages and challenge employers who unlawfully pay them less. Nearly a quarter of employers ban their staff from talking about their wages, according to the Equalities Office. Next, the separate public sector duties on gender, disability and race will be brought under one roof, and public authorities will report on inequalities such as gender pay, disability employment and ethnic minority employment.

The final change will allow employment tribunals to make recommendations to benefit everybody in the workforce, not just for the individual that brings the case.

Non-legislative changes

The government is considering how state procurement can be used to deliver transparency and change. The public sector spends about £160bn every year on British businesses, so while firms may not be forced to promote diversity by law (they don’t have the same ‘duty’ as public sector organisations), they could lose out on government contracts if they fail to do so. The Equality and Human Rights Commission will conduct inquiries in sectors where there is “clear inequality”. Financial services is under the spotlight as its gender pay gap average is 41.5% compared with the national figure of 12.6%.

Businesses looking to attract the best talent will also feel pressure to sign up to a new equality kite-mark. To become accredited, businesses will need to report on the gender pay gap in their organisation and their employment of disabled and ethnic minority staff. Finally, the government will work with the CBI and unions to collect evidence on the effectiveness of equal pay job evaluation audits. Previous ministers have said there is no evidence to suggest that forcing firms to conduct equal pay audits will work to improve inequality.

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