Employers could be required to report on the amounts they pay male and female employees under a clause included in the new Equality Bill.
The government has said it will make it compulsory for firms with more than 250 employees to report on the gender pay gap by 2013 if sufficient progress on equal pay reporting is not made. The Equality Bill is expected to come into force from autumn 2010.
The Equality and Human Rights Commission (EHRC) will develop a set of metrics for gender pay reports in consultation with businesses, unions and other parties over the summer. Progress on reporting in the private sector will be monitored every year.
In addition, public sector organisations with more than 150 employees will be required to report on gender pay, as well as other provide other equality data on the numbers of black, Asian and minority ethnic employees.
The Bill will ban secrecy clauses that are used by nearly a quarter of employers to prevent employees discussing and comparing their pay, and. therefore challenge employers who unlawfully pay them less.
The Chartered Institute of Personnel and Development (CIPD) said gender pay reporting was not the answer to the problem of unequal pay. Charles Cotton, CIPD reward adviser, said: “Gender pay reporting is not the answer to the gender pay gap. The pay gap is a deep-seated and complex problem, as the Government-commissioned Prosser review showed which made 40 recommendations to address the issue. Choices made at school, choices of what qualifications to pursue, careers advice and cultural norms have a far greater impact in pushing men and women down different career paths than discrimination in the workplace. And there are basic realities about career and life paths that mean the actual, like-for-like pay gap is not as great as some of the sensationalist headline figures suggest.”
Robert Washington, associate in the employment practice at Hogan & Hartson, added: “The major impact is likely to be for businesses in which pay gaps exists, as a requirement to publish details of these may open the company up to claims in Employment Tribunals from disgruntled employees.
“Under the current law, the Equal Pay Act 1975, employees who are being paid less than the comparator of the opposite gender may bring a claim to recover the difference in pay for up to six years prior to the claim. The right to bring such a claim is likely to be carried over in the new Equality Bill. Employers will also face the cost of bringing pay back into line for other employees to prevent future claims.”
There are also fears that the measures could see employers having to manage the burden and extra costs resulting from greater administration.
David Yeandle, head of employment policy at EEF, the manufacturers’ organisation, said: “The Equality Bill brings together all existing discrimination legislation which should enable employers to better understand their legal duties and responsibilities particularly if this is supported by the provision of clear practical guidance on equality issues from the Equality and Human Rights Commission (EHRC).
“However, the cultural change needed in our society to encourage a more diverse workforce and address equality issues will not be achieved by imposing unnecessary administrative burdens on business such as the requirement to publish gender pay data. This will do nothing to reduce the gender pay gap and could undermine manufacturers’ efforts to encourage more women to work in manufacturing.”
The bill is is designed to strengthen and consolidate nine existing anti-discrimination laws, increase transparency and help tackle the gender pay gap. According to the EHRC, in the financial services sector women are paid up to 60% less than men and 79% less in bonuses.