The Gender Equality Duty could push up the cost to the public sector of outsourcing services, and could lead to more equal pay claims, experts have warned.
The legislation, which came into force on 6 April, requires contractors to reveal details about internal pay inequalities, and public bodies to actively promote gender equality, including equal pay.
It could mean an increase in wage bills for firms providing services to the public sector, as well as public authorities, said Emma Burrows, partner at law firm Trowers & Hamlins.
“The duty will push up the cost to public sector authorities of outsourcing services to the private sector, thereby undermining any cost savings outsourcing provides,” she said.
The requirement for private sector suppliers to publish details of staff pay will increase the risk of exposing inequalities that were previously hidden, Burrows said. “The door would then be open to equal pay claims on a massive scale.”
Tony Virdi, board member at trade body the National Outsourcing Association, said the duty might have far-reaching implications for the public and private sectors.
“The new legislation means that suppliers could now be forced to standardise salaries across the board,” he said. “It could even potentially drive organisations in both the public and private sectors to use offshoring more widely.”
But Norman Rose, director-general of the Business Services Association, which also represents companies providing outsourcing services, insisted that private sector suppliers already followed the public sector’s lead.
“The public authority sets the rules and we follow,” he said. “We seek indemnity from clients and do not practise discrimination.”
Stephen Moir, director of people and policy at Cambridgeshire County Council, and lead on pay and workforce strategy for the Public Sector People Managers’ Association, said outsourcing agreements should be about delivering more efficient services.
“If private sector providers are unable to offer this and give due regard to equality considerations, is that really how taxpayers want to see the public purse spent?” Moir asked.