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Forced gender pay gap disclosure raises questions

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The prime minister’s plans to force large companies to publish gender pay gap details, while broadly welcomed, have met with some queries from the business community over the effectiveness of this in practice.

David Cameron announced that, as of early next year, companies with over 250 employees will need to disclose the difference between the salaries of their male and female employees.

Some are suggesting that this tactic will be ineffective without careful planning. Susanne Thorning-Lund, partner at Odgers Berndtson, commented that although publication of gender pay gaps is an emotionally attractive proposition, it remains a hugely complex issue.

“As the largest UK-headquartered global search firm, many of our clients are similarly UK head quartered but the vast majority of their staff work in overseas markets. How can such a policy be rigorously applied across very different cultures?

“The debate also needs to focus more on how a broader spectrum of views from individuals of all career backgrounds can positively impact business decisions.  Those with different functional backgrounds, for example in procurement and those who cross sectors offer a fresh perspective.”

Sarah Burke, employment specialist solicitor at Thomas Eggar LLP, says that the success of the initiative hinges on how companies are required to report data.  “The devil is, as always, in the detail and so we will need to see exactly what obligations larger businesses will have in disclosing information about pay to properly assess the impact of this plan,” she said.

“Too general or vague information, such as average pay data for male and female staff employed by the business as a whole, may not actually move us much further and such information is unlikely to help in establishing whether staff are being paid the same amounts for the same work.  

“Continuing to encourage more female senior appointments and the sharing of family related leave (under the new shared parental leave rules) may have a much better practical impact rather than simply tying businesses up in red tape in relation to general data reports.” 

Sarah Churchman, PwC’s head of diversity, agreed other supporting measures would be needed: “Businesses can only tackle gender pay differences if they understand what is happening in their business in the first place, and therefore where they need to focus their efforts.

“But this is a complex issue and calculating pay averages for the whole workforce won't necessarily reveal where the issues are. Therefore the more detailed information companies can publish, including perhaps differences at a grade level and certainly details of actions they are taking to address gender inequality, the better.

“Publishing information on gender pay differences externally will create the strong sense of accountability needed for businesses to drive real action. But gender pay analysis is only one of a number of measures that organisations should be monitoring as part of their efforts to make sure their workplace has equal opportunities for all.

Gloria De Piero, the shadow equalities minister, said it was good news that the government had embraced pay transparency.

But she added: “For pay transparency to make a real difference, we need to have an annual equal pay check which measures progress and recommends what action needs to be taken – a move the government voted against earlier this month.”