Annual gender pay gap disclosure by UK companies with 250 or more employees will be required from 2018. However, there are concerns that the new requirements fall short in addressing gender pay inequality – and leave the UK lagging far behind the rest of Europe.
The UK has a national gender pay gap of 19.2% and ranks 76th for gender earnings in the Global Talent Competitiveness Index. It is therefore somewhat surprising that the new regime does not require remedial action to close the gaps or impose penalties for non-compliance.
Many European countries require employers with far fewer employees to address gender pay gaps identified. For example, Sweden is eighth in the index and requires companies with 25 or more employees to carry out a pay survey and produce an equal pay action plan to detect and remedy issues. Neighbouring Finland ranks 20th and requires companies with 30 or more employees to survey pay and share an equality plan with the workforce every other year.
France is 24th and requires companies with more than 50 employees to carry out annual gender pay analysis and define action plans for combating pay gaps. Initially lacking an enforcement mechanism,
the French obligations saw increased impact following the introduction of fines for non-compliance.
Although the new regime is a step towards improving UK gender pay equality, the absence of any requirement to address pay gaps and lack of penalties for non-compliance could result in minimal change to the UK gender pay position under Theresa May’s leadership.
Ed Stacey, partner and head of employment Law, PwC, London