Will Smaller Businesses be Required to Report their Gender Pay Gap?

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02 Aug 2018

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The Gender Pay Gap reports earlier this year found that the UK has one of the highest gender pay gaps in Europe. The latest report by the Business, Energy and Industrial Strategy Committee recommends widening the net of companies needing to report their pay gaps to include companies with 50 or more employees.

The report also suggests that companies should be required to produce action plans as well as narrative reports on the action they are taking to reduce the gap, and that these reports should also be published. The jury is still out on whether this will become a legal requirement- but the law certainly seems to be heading in that direction.

Equal Pay and Gender Pay Gap – What’s the Difference?

In spite of all of the publicity surrounding the gender pay gap, there is still widespread confusion on the difference between equal pay and the gender pay gap. Here is the difference, in simple terms: Equal Pay – Is a legal requirement. Men and women must receive equal pay for equal work. This is enforced by the Equal Pay Act 1975 and the Equality Act 2010. Failure to give men and women equal pay is classed as discrimination and is punishable by law. The gender pay gap does not measure whether men and women receive equal pay. Gender Pay Gap – The gender pay gap is the average overall pay and median overall pay for men and women throughout the organisation. The pay men and women receive can be different due to a number of factors:

  • Ratio of male/female employees
  • Bonuses awarded
  • Shift patterns

While men and women may receive the same pay for the same work, women may be massively misrepresented within a business, and indirect discrimination may occur. For a full explanation on the differences, see our Free Download: Gender Pay Gap & Equal Pay: What’s The Difference?

Why is it Important?

The pay gap reports produced in April showed that pay gaps of 40% and more were not uncommon in certain sectors, and 78% of organisations reported gender pay gaps in favour of men. Although the issue has been present for as long as women have been in business, this is the first concrete proof that discrimination and inequality in gender exist within the workplace. Suzanne Tanser, Reward Business Manager at Croner states: “The mandatory reporting requirements for companies with over 250 staff only have so far presented just a snapshot of the Gender Pay issue in the UK by telling the story for only half of the workforce. It’s so important that smaller companies are also compelled to be transparent as this will give a much wider picture and push the underlying issues further up onto business owner’s agendas. These issues are indeed complicated and need tackling at a grass roots level for significant change to be achieved. Step 1 is to measure the scale, look for quick wins and then formulate a long term plan that will positively impact the scale of the issue for each organisation. If reporting is made mandatory for smaller businesses the government will also need to work harder to demystify the differences between gender pay and equal pay as there is still a great deal of confusion in the marketplace around these points.”

Expert Support

For support producing your gender pay gap report, or any other pay & benefits issue, contact a Reward expert on 0808 145 3374

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