GENDER PAY REPORTING
Coalition drops mandatory pay reporting
Businesses will be asked to help tackle the wage gap between male and female employees by publishing pay data about their workforce on a voluntary basis under new plans announced by the coalition government.
As part of its new "Equality Strategy", the government has reaffirmed its commitment to a voluntary gender pay disclosure regime and will resort to legislation only if that voluntary regime fails. The government will annually review levels of compliance whilst retaining its power to impose a mandatory regime.
Equalities minister Lynne Featherstone said that the proposal, aimed at organisations that employ 150 or more people, will “increase transparency and help employers identify problems”.
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Section 78 of the Equality Act, passed under the previous Labour administration, provided for the introduction of mandatory pay reporting if sufficient progress on reducing the gender pay gap has not been made on a voluntary basis by 2013.
The coalition’s new equality strategy says: “We will annually review the numbers of companies releasing information, and its quality, under the voluntary approach to assess whether this approach is successful and take a view over time whether alternatives are required, including using a mandatory approach through section 78 of the Equality Act 2010. While we work with business and others to ensure the voluntary approach is successful, we will not commence, amend or repeal section 78.”
“Flexible approach” required
Featherstone made the announcement at the publication of the annual Female FTSE100 report which shows that the number of women on the boards of Britain's biggest companies has barely increased in the past three years.
She told the audience of business leaders: “We want to move away from the arrogant notion that government knows best, to one where government empowers individuals, businesses and communities to make change happen. Different organisations face different challenges in promoting equality so if we are to get this right for everybody a much more flexible approach is needed.”
She added: “Today's equality strategy is our blueprint for change, including plans for voluntary pay reporting and positive action in recruitment and promotion. These plans are absolutely not about political correctness, or red tape, or quotas. They are about giving individual employers the tools they need to help make the workplace fairer.”
Featherstone blames economic slowdown for U-turn
In an interview with the Guardian newspaper to unveil the strategy, equalities minister and Liberal Democrat MP Lynne Featherstone explained her own change of heart on the issue by saying: "Right at this moment of financial peril to the nation is perhaps not the moment to introduce mandatory pay audits."
As the Guardian points out, the Liberal Democrat manifesto pledged to introduce fair-pay audits for all but the smallest companies. Featherstone told the newspaper: "It was a different world two years ago - financially and in terms of pressures on business. We are in a completely new landscape now . . . Much more of partnership working, no longer government dictates, this is absolutely the time to make voluntary pay-reporting work."
--> “Coalition abandons compulsory audits of pay gap between men and women”, by Amelia Gentleman and Jane Martinson, guardian.co.uk, 2 December 2010: www.guardian.co.uk/politics/2010/dec/02/pay-gap-audits-businesses-featherstone.
Reaction
Fawcett Society
www.fawcettsociety.org.uk
Ceri Goddard, Fawcett’s Chief Executive, said: "The government's decision not to bring into force Section 78 is a huge disappointment, and means this injustice will continue for a long time to come. The government has today consigned another generation of women to lower pay. Their proposal to rely only on voluntary business action on pay isn't just naive, it sends a dangerous signal that tackling discrimination against women is a choice not a requirement. Encouraging and supporting voluntary action is important but it should be combined with clear legal requirements not replace them.”
She added: “Sticking our heads in the sand won't make the pay gap go away. The government claims to be committed to transparency, yet in not expecting large employers to at least monitor the pay of their male and female employees it seems to be encouraging an approach of ‘see no evil, hear no evil’.”
Goddard concluded: ““Refusing to bring into force section 78 means allowing the gap in pay between women and men to widen, at a time when women across the UK are already finding it harder than ever to make ends meet. With job losses in the public sector and spending cuts already threatening women’s overall economic independence, robust action on equal pay is more not less important.”
PricewaterhouseCoopers
www.pwc.co.uk
Dawn Nicholson, HR services partner at PwC, said: "Regardless of whether gender pay audits are voluntary or compulsory, the momentum behind greater disclosure around pay is irresistible. Companies need to get their house in order and remove any pay disparities that cannot be justified, because they are going to have to reveal their pay gap data either under the voluntary or mandatory regime, if this comes into effect. A recent poll PwC commissioned of 1,148 workers revealed that 49% would ask for a pay rise or look for a new job if they found out for certain that colleagues at the same level were paid more. This highlights the potential fallout if disparities are not addressed.”
She added: "Separately, the European Commission has issued a consultation on improving companies' disclosure of non-financial information. The Commission's view is that better disclosure of non-financial information may be a tool to further increase the number of European enterprises fully integrating sustainability and responsibility into their core strategies and operations in a more transparent way. The consultation is focussed on reporting from a corporate governance perspective, including disclosure around diversity and equality, which may drive further change in this area."
A final word
“I can also confirm today that we will be working with business to develop a voluntary approach to pay reporting that works for you. We believe that by helping you to see where the problems are you will be able to take the kind of constructive, measured and targeted approach needed to make real and long-lasting change.
"We will annually review the numbers of companies releasing information, and its quality, under the voluntary approach to assess whether this approach is successful - and take a view over time whether alternatives are required, including a mandatory approach through section 78 of the Equality Act. But we really expect and want the voluntary approach to work. This will give better information and is more likely to drive successful change.” - Lynne Featherstone, minister for equalities, speaking at the launch of 2010 Female FTSE 100 report in London, 2 December 2010.
Want to know more?
Title: The Equality Strategy - Building a Fairer Britain, HM Government, December 2010.
Availability: Download the 29-page report in PDF format at www.equalities.gov.uk/news/equality_strategy.aspx.
You can read Lynne Featherstone's speech at www.homeoffice.gov.uk/media-centre/speeches/equality-strategy-speech.
As part of the new approach, the Government Equalities Office will become a unit of the Home Office, “bringing equality into the heart of government”.