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Large UK employers should start preparing for gender pay gap reporting now, says expert


Large UK employers should already be thinking about how best to present information relating to any gender pay gap at their organisation ahead of mandatory reporting requirements coming into force, an expert has said.

Helen Corden of Pinsent Masons, the law firm behind Out-Law.com, was commenting as the UK government began a 12-week consultation on the information to be included in gender pay reports once the new requirements come into force. As announced by the coalition government in March, public and private sector employers with 250 employees or more will be required to publish the difference between the average pay of their male and female employees.

Corden, an employment law expert, said that employers should consider conducting a legally privileged equal pay review ahead of the mandatory requirements coming into force. This would help them to "identify risks, focus equality initiatives to close any gaps and inform communication and reporting strategies; in particular, enabling them to publish data in an informed and positive way", she said.

"If the review uncovers a pay gap, then employers will want to think about how they can contextualise this as a means of explaining to employees, to potential recruits and the outside world the steps that they are going to take to address the pay gaps that have been identified and what their track record has been in terms of closing those gaps," she said.

The overall gender pay gap for all employees, whether full or part time, is currently 19.1%. This means that, on average, a woman earns around 80p for every £1 earned by a man.

Legislation introduced towards the end of the coalition government enacted section 78 of the 2010 Equality Act, allowing the government to make regulations requiring employers to publish information about the differences in pay between their male and female employees. The consultation, which closes on 6 September, seeks views on the content of those regulations: in particular, which figures should be published and how often, and whether employers should be required or allowed voluntarily  to publish contextual information alongside the figure.

The consultation sets out a number of options for presenting gender pay gap information: a "relatively simple" overall average figure; separate figures for full-time and part-time employees or the difference in average earnings of men and women by grade or job type. It does not express a preference for any particular method. Depending on the calculation methods used, "safeguards" will be needed to preserve individual and commercial confidentiality, according to the consultation.

"Whatever form of report employers have to publicise, there will be issues in terms of potential recruitment, retention and reputation," said employment law expert Helen Corden. "If the pay gap is large, and larger than competitors, then this will obviously impact on recruitment and retention and will say something about an organisation's commitment to gender equality.

"If there is an obligation to publish quite detailed information about pay structures this has much wider implications in terms of its impact on matters such as collective bargaining, pay settlements across the workforce and the scope for individual grievances if people feel that they are being paid below average for their comparator group. This will therefore need some careful analysis, some deep understanding of the factors in play over time and some very careful and considered reporting of the actual outcomes of these audits," she said.

Writing in the Times newspaper, Prime Minister David Cameron said that the new 'national living wage' of £7.20, announced as part of the Summer Budget earlier this month, would help to close the gender pay gap by primarily benefitting women, who tend to be in lower-paid jobs.

"Transparency, skills, representation, affordable childcare - these things can end the gender pay gap in a generation. That's my goal," he said.

"This government is providing a wide programme of support for women in the workplace, introducing 30 hours of free childcare, 20.6 million employees now able to benefit from flexible working, and the new careers service putting businesses in the lead and showing schoolgirls that no profession is off limits," he said.

The government has also announced that a 25% target for female representation on the boards of companies in the FTSE 100 leading companies by share value, set by Lord Davies of Abersoch in 2011, has finally been met.

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