Mandatory reporting of the UK's gender pay gap set for a potential adjustment
In a bid to ensure that outsourcing cannot be used as a means to avoid paying equal wages, the UK government has issued a call for evidence. This move, if implemented, will directly impact companies operating within the European Union, particularly in terms of compliance, reporting obligations, and transparency in pay structures.
Under the Employment Rights Bill (ERB), large employers (250 or more employees) will be required to publish gender pay gap data, as well as the identities of outsourced service providers. This requirement is part of a broader drive towards pay equality, as the government seeks to address the persistent gender pay gaps that still exist in many sectors.
The infrastructure sector, for instance, reported the highest median hourly pay gap at 21.04%, a small decrease from the previous year. Similarly, the financial services sector showed a high median hourly pay gap of 20.36%, demonstrating only a slight decrease from the year before.
The call for evidence also outlines plans to establish a dedicated equal pay regulatory and enforcement unit in the UK. This unit is expected to play a crucial role in enforcing the new equal pay measures and ensuring compliance.
Since the introduction of mandatory gender pay gap reporting in 2017, most industries have shown some improvement. However, the reporting regime has often been criticized for its limited effectiveness. The government's latest call for evidence aims to address these criticisms and drive more significant change.
One of the proposed measures is to require large employers to publish targeted gender pay gap action plans. These plans could potentially lead to more meaningful change in gender pay practices.
The EU Pay Transparency Directive, which aims to promote pay equality, is also part of this broader shift. The directive introduces a range of measures, including gender pay gap reporting and pay transparency measures. EU member states are required to transpose the directive into national law by June 2026.
The reporting of gender pay gap data has helped improve transparency around workplace pay disparities. However, women continue to be overrepresented in lower-paid roles, accounting for 54.72% of employees in the lowest paid quartile.
In a positive development, the proportion of women in the top quartile of salary ranges has risen to 41.71%, continuing an upward trend from 2021. This suggests that efforts to address gender pay gaps are beginning to bear fruit.
The UK government has also proposed to make ethnicity and disability pay gap reporting mandatory for larger employers, with draft legislation expected soon. This move is expected to further enhance the drive for pay equality and address disparities across different demographic groups.
The proposed Employment Rights Bill (ERB) could mark a turning point in the drive for real change in gender pay practices. By introducing new requirements for pay transparency and action plans, the government is taking concrete steps towards a more equitable workplace.
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