The Equality Bill: the view from small businesses

gender pay


Solicitor Jasmine van Loggerenberg has argued in favour of the Equality Bill, but the Federation of Small Businesses is not so convinced. Chairman John Wright outlines his concerns.

‘Equality’ can be a bit of a thorny issue for small businesses. Equalities legislation imposes requirements that seem to have very little relevance to small businesses with just four or five employees, yet complying with the law still takes up business time. For the owner of a small business, these employees are individuals, not statistics to divide neatly into columns to show diversity. The new Equality Bill – which looks at positive discrimination and gender pay gap – focuses mainly on big business and the public sector, but all businesses will need to understand and comply with it. However, it means very little to the small business owner who hires the best candidate and does not have any other employees to compare the role, pay and status of the new employee with.

Research shows small businesses already employ more women, more older workers and people with fewer qualifications than big firms. A third of the jobs in small businesses are part time. So small businesses are already flexible employers, and they employ those who might find it harder to get jobs in larger companies. This is not because of any great commitment to ‘diversity’, or as the Government would put it, to ‘tackling socio-economic inequality’, but because they simply hire the best people they can for the job, and strive to hold on to those employees who are committed to their businesses.

Gender pay gap

How does this fit with the gender pay gap, flexible working and part time working, that we hear so much about at the moment in the media?

On the gender pay gap: small businesses do generally pay less than big businesses, but cases of direct pay discrimination are very rare. As small businesses employ more women than larger companies, this is likely to contribute slightly to the gender pay gap that exists in the wider business world, including both large and small firms. However, to make up for the lower levels of pay, many small businesses tend to offer a more positive work environment: their staff tend to rate their relationship with their manager and their work-life balance more highly than in the largest firms. In small law and accounting firms, for instance, employees receive less pay, but there tends to be a very different work culture.

For many mothers and fathers this is a positive choice. Should parents have to accept a pay cut to get a flexible working? No. But if in choosing whether to take a job in a business that pays more or another that offers a better work environment, that is a choice which could seriously affect the 40 hours a week (or more!) you spend at work, whether you are a parent or not.

Flexible working is a term which means different things to different people and organisations. In some companies, it could be a ‘core hours’ system; for others it could be shift work, reduced hours, part time roles or home-working. Clearly some of these options will involve a cut in salary pro rata. Government, businesses and employees need to ensure there is a common language and shared expectations of what exactly is meant by flexible working.

In reality the gender pay gap has more to do with education and historic inequalities in the job market than modern business practices. It is unlikely that this Bill going through Parliament now will achieve anything for women who were badly advised in schools 30 years ago, or to stop the job segregation that sees girls leave school at 16 and enter worse-paid careers than their male peers.

Legislation also always puts an added burden on small businesses: new laws are often time-consuming and onerous to comply with. Small firms find it difficult to keep up to date with all the new hoops they have to jump through, and the time it takes to stay up to date is time taken away from the business. The Equality Bill, while meant to be a simplification of existing law, will bring about changes for employers: new duties, changed duties, new things you can and can’t say during interview. Despite the Bill being published, business will still have to wait and see how they will be expected to apply the new law in everyday situations.


Despite the main focus of the Bill being on big businesses and the public sector, the impact will be felt by all businesses. One of the most practical pieces of support – help with identifying job roles and suggestions on pay levels for different roles to ensure pay equality – is still missing from the overall package of free help available to small businesses.

The key to the Bill is going to be good support and guidance for all businesses. The Federation of Small Businesses is calling on the government to ensure this is provided promptly as part of its Businesslink website to ensure all information is easily found in one place.

John Wright is Chairman of the Federation of Small Businesses.

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