Government pushes back on recommended changes to Gender Pay Gap reporting (for now)

In August, the House of Commons’ Business, Energy and Industrial Strategy (BEIS) committee published its recommended changes to the gender pay gap reporting regime. The government has now published its response to those recommendations, largely pushing back on them all (at least in the short term).

Reporting threshold remains at 250 employees (for now)

One recommendation of the BEIS committee was that the government should extend the regime to smaller companies with 50 or more employees. The government has declined to do so but ominously states that it will “encourage smaller companies to look at their gender pay gaps, to ensure there is fair representation of men and women at all pay grades in the organisation… and may consider revisiting this issue in future”.

No need to include partner remuneration (this year)

One of the more controversial aspects of the current regime is the exclusion of partners in traditional partnerships and limited liability partnerships. Many professional services firms are structured in this way and their highest earners are therefore excluded, skewing their figures. Some firms have nonetheless published partner pay figures but the government has confirmed that it will not be making any substantial changes to the guidance for this reporting year. However, the government will evaluate altering the guidance regarding partners in future reporting years, for example to introduce a voluntary reporting methodology for partners.

No mandatory action plans

The government is keen to ensure all employers produce an action plan to address the gap, once they have published their figures. They also encourage employers to publish those plans. However, the government is not making this mandatory (contrary to the BEIS committee’s suggestion) as it is concerned that a prescriptive format might be of limited value for employers and employees. Instead it encourages employers to create an action plan which is relevant to their individual situation and which they can truly commit to.

No need to drill down into further detail when reporting

The BEIS committee recommended that the current requirement to report on salary quartiles should be changed into deciles (allowing a more nuanced analysis) and that employers should show part-time and full-time gender pay gap statistics separately. The government has not accepted this recommendation and would consult with employers before doing so.

Extension to reporting on other protected characteristics

The Government is already in the process of implementing ethnicity pay gap reporting, with a consultation paper on the topic launched late last year. The government is also encouraging larger employers to report voluntarily on mental health and disability but there will be no mandatory requirement at this stage.

Next steps

Given the heavily caveated response of the government, it is worth keeping an eye on developments in this area once the government has more capacity to focus on matters other than Brexit.

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