Employers with more than 250 employees will have to reveal differences in pay between male and female members of staff under a change to a law passing through Parliament.
Firms that do not comply with the new rules could face fines of up to £5,000.
The government will set the form and timing of gender pay reports in the coming months. As a bare minimum, a report must consist of a full-time gender pay gap, part-time gender pay gap and overall gender pay gap.
Currently, Section 78 of the 2010 Equality Act allows the government to make regulations requiring private and voluntary sector employers to publish information about the differences in pay between their male and female employees.
However, this legislation has never been enacted. Instead, the government introduced a voluntary ‘Think Act Report’ scheme in 2011.
Only five large employers including Friends Life and PricewaterhouseCoopers (PWC) report equal pay on this voluntary basis.
The bill, which will be introduced within the next 12 months, is a part of the Small Business, Enterprise and Employment Bill.
Kathryn Nawrockyi, opportunity now director at Business in the Community, said: “We welcome the passage of this amendment for mandatory gender pay gap reporting for large employers.
“As organisations such as Friends Life and PWC have shown, gender pay gap reporting can have huge benefits, not just in identifying and addressing pay gaps, but in tackling men and women’s different perceptions of pay within their organisations.
“However, our 2014 Gender and race benchmark found that one in five employers has never conducted an equal pay audit. I’d therefore encourage all employers, regardless of size, to monitor pay and reward structures at all levels, publish the results publicly and set out how they will tackle any gaps.
“By taking this decisive action, employers will send out a strong message that they are serious about workplace gender equality and that they reward all their employees’ efforts fairly.
“We will continue to work with businesses to support them in conducting gender pay audits and tackling any gender pay gaps within their organisations.”