By James Hand, University of Portsmouth and Victoria Hooton, Max Planck Institute for Legal History and Legal Theory
April 4th 2022 saw the deadline for private employers, who had a headcount of at least 250 employees on the snapshot date a year before, to report their gender pay gap information (with public bodies in England having their deadline and snapshot date five days before). This involves calculating, reporting and publishing figures showing: the percentage of men and women in each hourly pay quartile as of the snapshot date; the mean and the median gender pay gap based on hourly pay; the percentage of men and women receiving bonus pay; the mean and the median gender pay gap based on bonus pay; and, for most employers, providing a signed statement confirming the figures are accurate. Employers may, but not are not obliged to, add a supporting narrative, explaining the figures and the analysis and actions taken, and an action plan, setting out steps that they will take to close the gaps. Introduced in 2017, the requirement to produce the data was waived in 2020 in response to the Covid-19 pandemic and the pressures faced by businesses during a period of economic uncertainty and decline, resulting in one-third of businesses in Great Britain, who would otherwise have to provide this data, opting not to do so (according to Gender Pay Gap Service). The 2021 reporting was subsequently delayed by 6 months in 2021, when early reporting rates were running at a third of the level the year before, just before Covid-19 struck, but following the delay the number of reports was back to the normal level of over 10,000 employers, as it is again this year.
The requirement only applies to those who have 250+ employees (approximately 8,000 large businesses and 2,000 English public sector employers (Scottish public authorities operate on a two yearly cycle and have a 150+ threshold)). Given there are around 250,000 Small and Medium-Sized Enterprises (who employ between 10 and 249 people) – and over 1 million micro businesses (with between 1 and 10 employees), the requirement falls on a small percentage of employers (although due to their size the figures represent around two-thirds of employees).
The Fawcett Society have proposed extending the requirement to employers who have 100 or more employees, as part of a range of reforms to equal pay legislation (leading to Stella Creasy MP introducing the Equal Pay Implementation and Claims (EPIC) Bill and Baroness Prosser introducing the Equal Pay Bill [HL] in the last session of Parliament, both of which fell at the end of the session). Alongside reducing the limit, the Bill would mandate the publication of action plans to redress the gaps and extend the requirement to ethnicity as well as a number of matters relating to equal pay claims (creating a legal right to pay data of a potential male comparator, without a woman having to go through the time, expense and stress of the court process to gain this information; bringing the discretion to extend tribunal time limits into line with discrimination; and extending equal pay remedies, in line with discrimination, including pension rights lost as a result of pay discrimination and damages for physical harm and injury to feelings).
The Minister for Equalities has previously held that equal pay measures will be reviewed when the data suggests that this is necessary. At present, one could argue that the data that would prove this necessity is simply not being collected. There are as noted above 8,000 businesses who employ at least 250 employees but there are around 36,000 medium sized employers (who have between 50 and 249 employees). The proposal would not extend to all of those (as those with under 100 employees would not be included) but it would shed a greater light on the situation. Currently, around 3%-4% of the reports are voluntarily filed by employers with fewer than 250 employees, with the number slowly increasing each year (save for the Covid-waived year):
|Number of Gender Pay Gap Reports (source)|
The proposal would see a massive expansion of the numbers but allow more questions to be asked and, hopefully, answered.
The UK is not the only jurisdiction hoping to tackle the issue of pay transparency. In 2021 the European Commission proposed a draft Directive for equal pay transparency and enforcement mechanisms. The proposed measures include some provisions that are already in place in the UK regarding the gender pay gap and equal pay: the requirement to report gender pay gap statistics for employers with over 250 employees (Article 8); the requirement for evidence that the employer holds to be made available to claimants going through pay discrimination proceedings (Article 17); and the prohibition on preventing employees from disclosing their pay for the purposes of enforcing equal pay (Article 7(5)).
However, the proposal also goes further, by introducing a right to know (Article 7(1)) like that proposed by Stella Creasy MP in the UK. The right to know entails the employer giving information on the average pay of individuals doing work of equal value to the recipient. Given the potential breadth of equal value, it will be interesting to see how employers are expected to conceptualise work of equal value for this purpose. With regard to the gender pay gap, another novation in the EU framework is that the statistic reporting requirement includes an obligation to justify or rectify gender pay gaps of over 5% for any single category of workers (Article 9).
While one may question the use of the 250 employees cap in the EU framework, just as it may become the subject of reform in the UK, the proposal overall is encouraging. Attempts to tackle pay transparency acknowledge that there is a culture of pay secrecy underpinning and supporting gender pay gaps in the UK and EU. Moreover, provisions aimed at pay-related transparency help to rectify a long-criticised imbalance of access to information that deters or delays the enforcement of the right to equal pay.