Gender Pay Gap reporting – where are we now and what about ethnicity pay gap reporting?

19 October 2020

King’s College London’s Global Institute for Women’s Leadership published a report on 14 October, ‘Gender pay gap reporting: a comparative analysis’, examining gender pay gap reporting legislation across 10 countries around the world. The report found that the UK is ‘unique in its light-touch approach’ to requesting information from employers concerning what action they will take to address any gender pay gaps within their organisations. The two key areas where the UK appears to be out of step with other countries is the high minimum employee threshold for reporting and the fact that there is no requirement to report on policies or action plans. But what about ethnicity pay gap reporting, is it equally promoted ?

 

In the UK, private sector employers must have at least 250 employees to be subject to the gender pay gap reporting requirement. The threshold on public sector employers is 250 in England, 20 in Scotland and there is no specific threshold in Wales. By contrast, the average threshold within the other countries analysed was 50 employees, with Sweden having the lowest requirement of only 10. The report rightly calls for this minimum threshold to be lowered so that pay disparities within smaller employers can be monitored. The burden of gathering remuneration data could be mitigated by less onerous requirements to collect and submit data for smaller employers.

Disappointingly, it is not mandatory for employers in the UK private sector to publish action plans to tackle gender pay gaps. The Government Equalities Office estimated that only 50% of eligible companies elected to do so in 2018/2019. In terms of public sector companies, only Wales requires such organisations to publish gender pay gap action plans. It is clear that requiring companies to state what measures they will implement to address their gender pay gap would increase accountability and ensure that pay parity is prioritised.

The UK was nonetheless commended for its transparency in requiring data to be publicly available. In addition, the UK has very high levels of compliance, with 100% of employers complying with their reporting obligations in 2019. This may be influenced by penalties for non-compliance, including the threat of being published on a list of non-compliant companies or faring poorly in a sector comparative report.

However, while we acknowledge these are unprecedented times for many businesses, it is deeply worrying that gender pay gap reporting in the UK has been suspended in 2020 due to the coronavirus crisis. A report by Business in the Community found that the number of companies releasing their gender pay gap information has halved since 2019. Evidence has shown that gender inequality has worsened during the pandemic with COVID-19 disproportionately impacting women who are overrepresented in the sectors affected and more likely to work in lower-paid, unstable employment. Moreover, women have been shown to undertake the majority of caregiving and domestic work, and there has been an increase in domestic violence during the pandemic, making it even more crucial to examine women’s equality and properly monitor pay disparities.

The Fawcett Society has supported the Equal Pay (Information and Claims) Bill 2019-2021  which aims to improve the UK’s pay gap reporting system by reducing the threshold triggering reporting obligations and requiring employers to publish action plans with respect to both gender and ethnicity inequality. Further, it will give women the right to learn what male colleagues doing equal work or work of equal value are earning. This Private Member’s Bill will be presented to Parliament on 20 October 2020.

We are very pleased that the report emphasised the importance of reporting on pay disparities between workers from different ethnic backgrounds. It is essential that ethnicity pay gap reporting be equally promoted. Shockingly, none of the countries analysed as part of the research require employers to disclose data on ethnicity pay gaps. The UK has the opportunity to lead the way in this area by making it mandatory for this data to be publicised. We eagerly await the government’s response to the consultation on gender and ethnicity pay gap reporting, in the hope that the UK can champion fairness and diversity in the workplace.

50 years on from the original Equal Pay Act, at the current rate of change, it is expected that it will take at least 100 years (and possibly far longer) to reach pay equality. It is clear that requirements to report on gender and ethnicity pay gaps help employers to reflect on inequality within their organisations and take proactive steps to address it. The strides made towards pay parity between different genders and ethnicities will drive a more effective workforce and stimulate the UK economy in years to come.

 

FURTHER INFORMATION

If you would like any further information or advice about the issues explored in this blog, please contact Nikola Southern  or another member of our employment team.

 

 

ABOUT THE AUTHORS

Niki has a strong litigation practice. She has successfully pursued and defended numerous hard-fought cases in the High Court and Employment Tribunal for unfair dismissal, discrimination and breach of contract.

 

Niki has often acted in complex cases requiring her to navigate overlapping issues such as equal pay, discrimination, harassment, sickness absence, performance and misconduct.

 

 

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