Equality Act 2010 (Gender Pay Gap Information) Regulations 2017
Debate between Baroness Vere of Norbiton and Baroness Burt of Solihull
Baroness Vere of Norbiton (Con)
My Lords, the Secondary Legislation Scrutiny Committee highlighted these regulations as instruments of interest in its 20th report, and I am delighted to be involved with this debate on such an important issue. These regulations are the first use of the power under Section 78 of the Equality Act 2010. Section 78 delegates power to Ministers to make regulations requiring employers in Great Britain with at least 250 employees to publish information showing whether there are differences in pay between their male and female employees.
These regulations will affect around 8,000 employers and more than 11 million employees. An estimated 3.8 million employees will also be covered by separate regulations laid last week that will apply to the public sector. In total, the new regulations will cover nearly half of the workforce.
The gender pay gap is not about men and women being paid differently for the same job. Unequal pay has been prohibited since 1975. The gender pay gap is a measurement of the difference between men and women’s average earnings. The UK’s overall gender pay gap has fallen over time. It was 25% 10 years ago and is now 18.1% according to the latest ONS statistics. While this is moving in the right direction, progress is still too slow and voluntary reporting has not led to sufficient progress. According to McKinsey, eliminating work-related gender gaps could add £150 billion to our annual GDP by 2025.
Following two public consultations and extensive stakeholder engagement, the Government are delivering their manifesto commitment to require large employers to publish a range of complementary gender pay gap measures every year. Employers will be required to publish the difference between the average hourly rate of pay for male and female employees, calculated using the mean and the median. This will give employers a better understanding of their gender pay gap.
The regulations cover bonuses too. ONS figures show that more than £44 billion was paid out in bonuses across the UK economy during the 2015-16 financial year. We are requiring employers to publish the difference between the average bonuses paid to men and women as well as the proportions of male and female employees who receive a bonus. This will encourage employers to ensure that their practices for awarding bonuses are fair and transparent.
Fewer women than men are employed in senior and higher-paid positions. Requiring employers to report on the proportions of men and women in each quartile of their pay distribution will ensure that they consider whether there are any blockages to women’s progress. It could also be valuable in making comparisons with competitors who may be benefiting from actively nurturing female talent. The regulations will require employers to publish the information on their own website every year in a manner that is accessible to employees and the public. A written statement signed by a director or a senior employee must also be published to confirm the accuracy of the information. As well as appearing on an organisation’s website, the information will also be published on a government-sponsored website. Requiring the information to be published in this way will establish a database of compliant employers and make all published information available in one place.
The regulations do not create any additional civil or criminal penalties. Failure to comply would be an “unlawful act” and fall within the existing enforcement powers of the Equality and Human Rights Commission under the Equality Act 2006. The Government can consider alternative enforcement mechanisms if the level of compliance is not satisfactory. The Secretary of State will review the regulations five years after commencement.
The Government have worked closely with ACAS to develop clear guidelines to help employers implement the regulations, and they will be published shortly. Transparency is not a silver bullet but it will incentivise employers to analyse the drivers behind their gender pay gap and explore the extent to which their own policies and practices may be contributing to that gap. These regulations are only one element of the Government’s strategy to modernise workplaces. We have already extended the right to request flexible working to all employees; introduced a new system of flexible parental leave; and committed to providing 30 hours of free childcare a week for working families.
The principle of greater transparency on gender pay differences has cross-party support. I hope that noble Lords will support the regulations. I beg to move.
Baroness Burt of Solihull (LD)
I welcome the noble Baroness to her new post. I hope that every regulation or piece of legislation that she introduces will be as good and progressive as these regulations. I welcome these regulations on behalf of my party, and especially all those colleagues who worked tirelessly in coalition to make this legislation a reality. I am so glad that the Conservative Government have kept their word and implemented this Liberal Democrat policy, which I note found its way into their 2015 manifesto, although it had not been there in 2010. I pay tribute particularly to the hard work and sheer determination of Jo Swinson, who got this through against the odds.
Equal pay and better gender representation in business is good for the economy as well as helping to create a fairer society. As Jo said:
“Businesses have a choice, to view gender pay reporting as a burden, or as a catalyst to seize an opportunity. When competitive advantage is increasingly about attracting and developing the best people, a better understanding of how you're valuing and rewarding your people is powerful. Gender pay data may be uncomfortable, but at least it can no longer be ignored”.
As many noble Lords may know, although progress is being made, figures by the Fawcett Society show that women are essentially working the last month and a half of the year for free. Looking at it in these stark terms, we can all see how ludicrous this is. However, as the noble Baroness has already said, this legislation will not be a silver bullet as we would all wish. More needs to be done.
Girls and women outperform men at every stage in their educational life, yet we constantly see women not reaching the top jobs. We must ask why this is. Report after report points to women missing out on bonuses, promotions and pay rises as they get older. When the babies come along, or other caring responsibilities arise, it is too often the women who makes an economic sacrifice. As the Minister has already said, one of the steps that we introduced in coalition was equal parental leave—a small step in making men and women equal, and giving men a better opportunity to bond with, and care for, their babies.
Therefore, let us focus today on another good, progressive piece of legislation. Let us welcome these regulations, the better-informed debate they will engender and the stepping stone they will provide to better workplace equality.