Mandatory Gender Pay Gap Reporting to be Introduced by 2016

Mandatory gender pay gap reporting may be introduced by 2016 as a result of a proposed amendment to equal pay legislation. 

Section 78 of the Equality Act 2010 (EqA 2010) contains a power for the government to make regulations requiring mandatory gender pay gap reporting. 

Until now these powers have not been activated. Instead, the government chose to introduce gender pay reporting on a voluntary basis (the Think, Act, Report initiative). This initiative has not been a success, with reportedly less than 2% of signatories having actually published their gender pay gap information. 

Following calls by the Liberal Democrats, the government has tabled an amendment to the Small Business, Enterprise and Employment Bill 2014-2015 (the Bill) requiring regulations under section 78 of the EqA 2010 to be made within 12 months of the Bill coming into force, which could be as soon as the end of March. 

This would mean that, by 2016, companies with more than 250 employees would have to publish information about their gender pay gap. The type of information that will have to be reported will depend on the wording of the regulations, but companies could be required to disclose the difference between men’s and women’s starting salaries and the bonuses they receive. It is expected that companies would be required to report annually.

Companies that breach their reporting obligations will be hit by a fine of up to £5,000, not to mention the potential reputational damage.