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Gender pay gap reporting: Will increased transparency remedy the pay gap?

Despite the introduction of equal pay legislation and changing attitudes to the role of women in society, the United Kingdom remains one of the highest ranking nations in terms of gender pay gap in the European Union. This is a stark reminder of how far the movement for achieving pay equality is yet to go.

In this article, Lamia Lamki, 4th Year LLB, discusses the causes of pay inequality and whether the future introduction of transparency regulations are enough to meet this aim.

What is the gender pay gap and what are the causes?


The gender pay gap (‘GPG’) is defined by the European Commission as being the relative difference in the average gross hourly earnings of all working men and those of all working women within the economy as a whole.[1] It will come as no surprise to state that the gender pay gap mostly affects women. The causes of this pay gap are similarly unsurprising. Direct discrimination, in that women are paid less for doing the same job as men, has become a much less significant factor due to the success of both European Union (‘EU’) and national legislation. However more often, it is that women are paid less for doing jobs of equal value to men which require similar skills and qualifications.[2] This not only leads to speculation about how the work of women is valued in society in that they are perceived as being worth less, but raises further discussion regarding social justice and equal opportunities.


Another factor which has contributed to the pay gap is that the labour market to this day is still very much segregated. Men and women largely work different jobs and very often one sex dominates a particular sector. When however considering sectors in which there are equal numbers of both sexes, women are found predominantly in the lower paid and less valued roles. While the number of women entering the legal profession currently is much higher than the number of men, the Law Society of Scotland’s findings in their review of the profession[3] found that women were more likely than men to be trainees, assistants, associates and solicitor team members, while men were more likely to be equity partners.


Further reasoning for the causes of the gender pay gap are rooted in stereotypes regarding the traditional role of women in society, including expectations that women should take career breaks in order to raise children or support dependent family members.[4] As a result of societal pressures and expectations, women are more likely to have career interruptions and work on a part-­time basis than men. This in turn affects their career development and very often results in them being overlooked for promotion.


Those who are unaffected by the pay gap may question, albeit selfishly, why it is important that this difference is remedied. The most obvious reason would be the promotion of equality between the sexes thus delivering a positive working environment. Closing the gender pay gap is said to also benefit employers and not exclusively workers. It has been suggested that by delivering equal pay, employers are able to recruit the best employees and improve their public image.[5] On the whole, closing the gender pay gap would result in greater profitability to the economy providing that workers are paid appropriately for the services they provide.


The future is transparency


In July 2015, Prime Minister David Cameron announced the long term endeavour to achieve complete gender pay equality in the UK within the next 25 years.[6] The first step in order to attain this shall be seen through the introduction of Regulations which are predicted to come into force in 2016.[7] It is expected that these Regulations will require employers to publish details of pay audits, thus revealing any gender pay gaps within their organisations. Whether the Regulations will have any far reaching impact in reducing the pay gap will remain to be seen, as will the possible implications for employers.


Following the introduction of the Equal Pay Act in 1970, the difference in pay between men and women has been slowly but surely diminishing. The Office for National Statistics’ (‘ONS’) most recent findings were published in November 2014,[8] and show that the gender pay gap was 9.4%,[9] down 0.6% from 2013. It appears from the ONS findings that the private sector retains the highest pay gap at 17.5%, however the public sector pay gap has risen to 11%.[10] The most recent EU figures showed an average EU GPG of 16% based on average earnings. The GPG for the UK ranking was particularly high with a pay gap of 25%.


Provisions to create transparency are already in place within the Equality Act 2010, most notably in s.77 which provides that any term within an employee’s contract purporting to prevent or restrict the person from disclosing or seeking to disclose information about the terms of that person’s work shall be unenforceable in so far as that person makes or seeks to make a relevant pay disclosure. This provision however relies upon individuals sharing information about their pay as opposed to extending the right to employees to access this information.


It is however the future implementation of s.78 which will bring into force the Regulations.[11] It is in this provision whereby employers will be required ‘to publish information relating to the pay of employees for the purpose of showing whether, by reference to factors of such description as is prescribed, there are differences in the pay of male and female employees’.[12] This will only apply to employers with 250 or more employees.


The question as to what the future Regulations requiring gender pay gap reporting will look like remains to be seen. It is likely that employers will publish the difference between average pay of their male and female employees at 12 month intervals and that the Regulations will apply to businesses in the public, private and voluntary sectors. As mentioned previously, the Regulations will only apply to businesses with more than 250 employees meaning that small and medium­ sized businesses will escape gender pay gap reporting, a move that has been criticised by the Trade Union Centre (‘TUC’).[13]


What are the benefits and possible implications of the Regulations?


The benefits to increased transparency in this area are twofold: aside from the purpose of closing the pay gay, the reporting will encourage employers to have important conversations regarding pay with their employees. Additionally, organisations will benefit from increasing awareness of areas within their business that are lacking participation by women and be able to take the necessary steps to remedy this. That is not to say that the future measures have been met without skepticism.


In terms of what employers will be required to report, without appropriate direction there is a risk that figures and statistics will be manipulated in order to convey a misleadingly lower gender pay gap. This risk would be especially relevant if the Regulations require employers to publish average pay since averages themselves are often misleading. All that it would take for the figures to be distorted is one female employee who is highly paid.[14] In order to avoid this, the Regulations may instead require a more complex system of pay disclosure which may factor in grading systems, full and part-­time staff and potentially even sector specific pay rates. It has further been suggested that defining pay in itself may provide for more complications thus presenting significant difficulties for employers to ensure compliance.


The hope that these Regulations will be clear and concise is unlikely to put the minds of affected employers at rest, particularly amongst concerns regarding enforcement measures. It is unclear whether discovery of a gender pay gap will open employers up to legal action from disgruntled employees. It is worth noting that regardless of such a finding, a gender pay gap will not automatically declare non­-compliance with equal pay law due to the complexity surrounding the causes of a pay gap. Further concerns regarding breaches of confidentiality when reporting employee pay details may be remedied through anonymisation of such details. It is more likely however that employers are worried as to the damage to their reputations and potential fines and criminal sanctions which may be included within the Regulations.


Concluding remarks


It is evident that despite the success of consistently lowering the gender pay gap the measures taken by the government in this area are somewhat overdue against the backdrop of past ad hoc regulation. The Regulations come as a somewhat underwhelming weapon to be used in the fight for gender pay equality. The success of this self­ reporting regime will remain to be seen and similarly the effectiveness of any enforcement measures likely to become central to the debate. In terms of equality, it is important that lawmakers and employers do not become complacent. Government response to this issue and declaration that equality shall be seen in this area within the next 25 years appears to be a particularly unmotivated response to a very real issue affecting many, mostly female, workers. The Regulations while providing an element of publicity will not help answer the question of principle importance to these employees, if they are being paid less, and the reason why?


[1] European Commission, ‘The Situation in the EU’, 21st June 2015, available at:­equality/gender­pay­gap/situation­europe/index_en.htm​ Last accessed: 23rd October 2015.

[2] Striking Women, ‘Gender Pay Gap and the Struggle for Equal Pay’, available at: http://www.striking­­issues­past­and­present/gender­pay­gap­and­struggle­equal­pay#C auses%20for%20the%20Gender%20Pay%20Gap​ Last accessed: 26th October 2015.

[3] The Law Society of Scotland, ‘Profile of the Profession 2013: Demographics and Work Patterns of Scottish Solicitors’, 24th October 2013, available at:​ Last accessed: 26th October 2015.

[4] D. Perfect, ‘Gender Pay Gaps’, Spring 2011, available at:​Last accessed: 26th October 2015.

[5] European Commission, ‘Why is it important to tackle the gender pay gap?’, 21st August 2015, available at:­equality/gender­pay­gap/tackle/index_en.htm​Last accessed: 27th October 2015

[6], ‘​Prime Minister: My one nation government will close the gender pay gap’, 14th July 2015, available at: ​­minister­my­one­nation­government­will­close­the­gender­pay­gap Last accessed: 27th October 2015

[7] It is currently unclear as to the exact date that these Regulations will come into force.

[8] Office for National Statistics, ‘Annual Survery of Hours and Earnings 2014’, 19th November 2014, available at:​Last accessed: 27th October 2015

[9] This is based on the median hourly earnings of full-­time employees, excluding overtime.

[10] A 1.5% increase compared to 9.5% in 2013.

[11] Equality Act 2010

[12] s.78(1), Equality Act 2010

[13] The TUC said the measures should include medium ­sized businesses and come with fines for non­compliance. BBC News, ‘Gender pay gap details to include bonuses’, 25th October 2015, available at:­34630029 ​Last accessed: 29th October 2015.

[14] D. Newman, ‘Section 78 of the Equality Act: the practicalities of promoting pay transparency’, 25th March 2015, available at:­guidance/section­78­of­the­equality­act­the­practicalities­of­promoting­pay­transpar ency/155290/​ Last accessed: 29th October 2015.


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