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New Proposals to Reduce the Gender Pay Gap

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Calendar October 17, 2018

The House of Commons Business, Energy and Industrial Strategy Committee has recommended that gender pay gap reporting should be extended to companies with more than 50 employees.

This recommendation follows the change in legislation where companies with more than 250 employees are required to report on their gender pay gap. In their report the Committee considered the effectiveness of these Regulations and called on the Government to take further steps in closing the gender pay gap.

The UK has one of Europe’s largest gender pay gaps with the median hourly pay for men currently 18.4% higher than for women across the UK economy. The current Regulations cover approximately half of the UK workforce and the Committee believes that extending the reporting requirements to firms with more than 50 employees in 2020 will help with policy development. The Committee also recommends that in the future the reporting requirement should be expanded to include data relating to disability and ethnicity to increase transparency and fairness.

The reporting requirement in the Regulations only requires firms with over 250 employees to publish figures. There is no requirement to publish the reasoning behind these figures and there is no requirement to create an action plan to reduce the gender pay gap. The Committee recommends that these should become part of the reporting requirement and that subsequent reports should report progress against action plans.
There have been varying interpretations on how to calculate figures when complying with the reporting requirements. This has caused ambiguity in results and differences in calculation between companies, for example in the calculation of bonuses. The Committee recommends that there should be additional guidance on how to calculate figures to aid accurate results.

Initially the Government believed the new Regulations would effect approximately 8000 companies but 10,528 employers reported for 2017-18. The Committee believes that to ensure compliance with the reporting requirement the Government should publish and maintain a list of all the firms that are affected by the Regulations.

Currently sanctions are not explicitly stated in the new Regulations. This had led to fears that companies would fail to take the Regulations seriously as enforcement is unclear. The Committee recommends that these uncertainties should be resolved with specific fines for non-compliance.

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