‘Gender pay audits should be subsumed into a Fair Pay Report’

Legislation requiring large employers to report their gender pay gap should be extended to cover ethnicity and disability pay gaps, according to a new report from the IPPR think tank.

It calls for employers to publish information on a wider range of pay inequalities in annual Fair Pay reports, in order to guard against unfairness in the workplace.

It also recommends that gender pay gap audits be extended to smaller employers.

IPPR conducted a survey, interviews and a focus group involving a total of 60 employers to assess the impact of the new rules on the gender pay gap. These required employers of more than 250 workers to calculate and publish the difference in average pay between men and women.

It notes that compliance has been high, saying more than 10,000 employers – 100 per cent of those within the scope of the new law – reported within 10 weeks of the deadline.

The IPPR research found that the regulations have pushed the gender pay gap – and gender inequality more broadly – up the agenda, prompting a board-level focus on the issue for the first time in many organisations.

It added that four in five (81.3 per cent) large employers have considered or taken further measures to narrow gender pay inequalities as a result of the regulations. A similar proportion expect the regulations to incentivise more employers to reduce the gap.

The research also found that – despite initial unease – there was strong employer support for gender pay reporting, with four in five employers saying the regulations should be maintained. Employers were also willing to consider extending transparency to other areas including ethnicity, an option on which the Government is currently consulting.

New analysis by IPPR found that over the last seven years, the gender pay gap fell by just 2.3 percentage points. At that rate the gender pay gap would not be eliminated until 2072, it says. However, it says gender pay gap reporting could speed this up.

The IPPR is calling for legislation to make it mandatory for larger employers to publish an annual Fair Pay Report which would set out the gender, ethnicity and disability pay gap at the organisation; the proportion of workers paid below the Real Living Wage; the internal pay ratio between the chief executive and the average employee; and a fair pay narrative, detailing the employer’s understanding of their pay gap, and their plans to tackle them.

It says the additional burden on employers who already collect pay data for the gender reporting requirements would be small, compared with the extension of pay transparency it would produce.

The report also calls for transparency to be extended beyond large employers to cover medium sized firms with 50 or more employees, though with a more limited and less frequent reporting requirement, and a transition period to allow time to adjust.

In order to tackle illegal unequal pay – where women are paid less for work of equal value – it says employers should also publish pay ranges by role to employees within their organisation and it says workers should be given a ‘right to request’ comparison data of pay levels and the right collectively to trigger an independent equal pay audit.

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• Gender Pay Gap