MIND THE GAP
Mind the Gap: Naming and Shaming to Close the Gender Pay Divide
The Equality and Human Rights Commission (EHRC) has continued their annual “naming and shaming” of organisations who have failed to publish their gender pay gap reports in 2024. This year, six have been highlighted.
EHRC have commented: “The total number of non-reporters is lower than in 2023 and 2022, showing the effectiveness of the EHRC’s current approach to enforcement.”
Background on Gender Pay Gap Reporting
The requirement for gender pay gap reporting was introduced in the UK in April 2017 as part of a broader initiative to tackle gender inequality. Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the Regulations), all organisations in the public and private sectors with 250 or more employees must annually report their gender pay gap data. This data includes information on the difference in average earnings between men and women, expressed as a percentage of men’s earnings.
The aim of the legislation is not only to promote transparency but also to encourage employers to take active steps towards closing the gender pay gap. Organisations must publish this data on their own website and submit it to the government, making it accessible to the public, potential employees, and competitors. Failure to comply with these regulations can lead to enforcement action by the EHRC, as well as damage to an organisation's reputation.
Impact of Gender Pay Gap Reporting
Since its introduction, gender pay gap reporting has had a significant impact. The visibility of pay disparities has sparked widespread debate and placed pressure on employers to address inequalities within their organisations. Many companies have implemented strategies to close the gender pay gap, such as reviewing pay structures, offering more flexible working arrangements, and supporting women in leadership roles.
However, progress has been slow, and the gender pay gap persists across many sectors. According to the Office for National Statistics (ONS), the gender pay gap among full-time employees in the UK was 7.7% in 2023, a slight increase from previous years. This highlights the need for continued efforts to address systemic issues that contribute to gender pay disparities, such as unconscious bias and lack of access to opportunities for career progression.
EHRC's Naming and Shaming
The recent action by the EHRC to name and shame six organisations that failed to comply with the reporting requirements is a stark reminder of the legal and ethical responsibilities of employers. This move serves as a deterrent to others and reinforces the message that failure to report is unacceptable. The named organisations now face not only public scrutiny but also potential enforcement action, including investigations and fines.
“The EHRC's decision to publicly name and shame non-compliant organisations underscores the importance of gender pay gap reporting in promoting transparency and accountability. While progress has been made, there is still much work to be done.”
The naming does highlight both progress in gender pay gap reporting. In 2023, the EHRC published the names of eight employers who failed to report their gender pay gap data for the 2022-23 period. This marks a significant reduction from the 28 employers named and shamed in July 2022 for failing to report their 2021-22 data. This reduction suggests that more organisations are taking their reporting obligations seriously, possibly driven by the fear of reputational damage. Despite the lack of direct civil enforcement mechanisms under the Regulations, the EHRC’s power to enforce compliance through public exposure remains a powerful deterrent, encouraging greater adherence to the reporting requirements.
Future Prospects for Wider Reporting
Looking forward, there is growing momentum for the expansion of pay gap reporting beyond gender. The new Labour Government has proposed that employers should also be required to report on pay disparities related to ethnicity, disability, and other characteristics. This would provide a more comprehensive view of inequality in the workplace and encourage employers to address a wider range of issues.
Some employers have already taken steps to voluntarily publish this information. In the absence of current legislation, the CIPD have provided guidance on ethnicity pay gap reporting, and the Co-Op have gone one step further this year with a ground breaking social mobility pay gap report.
By broadening the scope of pay gap reporting, the government would be taking a more intersectional approach, recognising that pay disparities are not solely based on gender. The Government argue this will lead to more inclusive workplaces where diversity is truly valued and rewarded.
The EHRC's decision to publicly name and shame non-compliant organisations underscores the importance of gender pay gap reporting in promoting transparency and accountability. While progress has been made, there is still much work to be done. The potential for wider reporting in the future could further enhance efforts to create a fairer and more equitable workplace for all.
If you would like to explore some of the voluntary reporting avenues, or want to ensure your existing pay gap reporting is up to date, don’t hesitate to get in touch.