Firms urged to prepare for new gender pay-gap law

A NEW law that will require businesses with 250 or more employees to publish their gender pay-gap statistics by April next year could lead to some becoming uncompetitive in the labour market.

As part of the 2010 Equality Act larger companies will have to collect and collate a selection of data relating to how male and female employees are paid, which, according to HBJ Gateley solicitor Sarah Gilzean, could impact on their ability to recruit in the future.

“This could be very big in the war for talent,” she said. “Prospective employees could look at [a company’s] gender pay gap and other diversity measures and say ‘is this where I want to go?’”

Under the legislation, companies are required to capture all their pay data for the period that includes 5 April this year and will have to publish both the mean and median percentage pay gaps between male and female employees.

They will have to do the same for male and female bonuses in addition to publishing the percentage of male and female employees who receive a bonus.

While businesses have until next year to make this information public, Ms Gilzean said that firms with large gaps will need to start thinking now about how to address them and how to communicate the reasons for the disparity.

“In terms of producing the information this is not a big burden,” Ms Gilzean said. “The impact will be in the public scrutiny of what gets published.

“There is no obligation to provide any context information but the guidance is that they will want to because it’s a very blunt instrument.”

In the legal sector, for example, data from the Law Society of Scotland shows that the gender pay gap for solicitors is 42 per cent despite 65 per cent of solicitors under 45 being female.

The reason for the large disparity is that equity partners at law firms are

three times as likely to be male than female, meaning that while it is unlikely that male solicitors are paid more than women to do the same job they do hold the more senior and as such betterpaid jobs.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said that while some companies may discover problems that they did not know existed while collating their own data, the long-term impact of the exercise is likely to be positive.

“The publication of gender pay gap statistics will be a welcome first step in achieving a degree of transparency on what is a crucial issue for our economy,” she said.

“It will help businesses to understand the scale of any issues they may have and will also help them to quantify what it is they need to do to address any gaps that emerge.”

She added that the Government would have to play its part too by investing in flexible childcare options that would “help to level the playing field”.