Seeing through the pay gap

women men pound coins

Now that the Government has announced that it is looking at how companies with more than 250 employees should publish the difference in pay of their male and female employees, it has taken an important step towards closing the persistent gap that exists in men and women’s salaries.

The move addresses one of Fawcett’s key concerns: forty five years after the Equal Pay Act, the average man still earns 19.1 per cent more than the average woman. This gap in earnings also leads to smaller savings and pensions pots.

Now the relevant legislation, Section 78 of the Act, could finally get some teeth but the devil will lie in the detail. A consultation, launched on 14 July 2015, will look at how the design of  the new gender pay gap regulations, including what, where and when information will be published.

Will the Government take the truly decisive measures needed to end gender economic inequality? Only a comprehensive set of regulations will require companies to be as open as possible. Fawcett will be working hard to ensure that the Government doesn’t let Section 78 slip and ensure that it serves as an effective tool in boosting women’s incomes and equality.

What is Section 78?

The proposals by the Government refer to the implementation of Section 78 of the 2010 Equalities Act. This empowers the Government to produce regulations to require companies with more than 250 employees, or 7,000 firms which in total employ 10 million men and women, to publish differences in pay between men and women.

However they were never required to publish the data. The Coalition Government tried a voluntary approach, much as they had successfully encouraged firms to increase women’s representation on corporate boards following the Davies Report.

This voluntary approach to pay transparency did not produce the desired results. Only five firms offered information that was often opaque and did not aid comparisons. In December 2014 Sarah Champion MP pushed a Private Members’ Bill which enforced Section 78 for the first time.

Why We Are Concerned

Despite the Government’s announcement on Section 78, its effectiveness will depend on how regulations are written: if badly written they could actually make things less clear for women who are anxious about pay discrimination.

The five firms mentioned earlier are being held up as best practice, but the data released differed between the companies and are difficult to relate to individual employees.

The information published shed little light on pay discrimination. The Conservative Government must commit to more comprehensive regulations if Cameron really does want to end gender pay discrimination by the time his daughters enter work.

What We Want

As a basic checklist, Fawcett wants to see Section 78:

  • Compare more than just basic pay – perks such as longer holidays, company cars, bonuses, and overtime cannot be left out as they are often where the pay gap is at its largest.
  • Have the power to punish employers who lie or do not otherwise comply. £5,000 fines just aren’t enough
  • Mandate employers to explain if there’s a gap, why it exists
  • Require companies to update their information publicly and regularly
  • Ensure information is straightforward and clear to everyone

Fawcett wants comparisons carried out term-by-term, as grade-by-grade ignores that pay structures are often more complex than grades (e.g. bonuses etc.) and can miss relevant inter-grade comparisons. Job-by-job comparisons ignore occupational segregation.

Section 78 of the Equality Act is an important step towards helping close these gaps for good, and whilst Fawcett is pleased the Government is finally backing its implementation, this is only the beginning. Only a comprehensive set of regulations which will require companies to be as open as possible and can meet the goals the Prime Minister has set himself.

You can give your views on Closing the Pay Gap consultation until 6 September 2015 11.45pm

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