Employment law: Government’s plans to close gender pay gap will be costly and ineffective

Employment law: Government’s plans to close gender pay gap will be costly and ineffective

The Government’s consultation on ‘Modern Workplaces’ closes today and they have come up with a number of reforms to employment law that have not been received well by major business groups.

In particular, the plans to reduce the gender pay gap have been strongly criticised by EEF, the manufacturers’ organisation, who believe the plans will add “an unnecessary extra burden on business” and that they will “reduce rather than increase transparency on gender pay differences”.

The new reforms would ensure that businesses which were found guilty at tribunal of discriminating between men and women through salaries would not only have to pay compensation to victims but also would have to carry out pay audits.

The pay audits, meant to discover whether gender pay gaps exist across a company, are estimated by the Government to cost £9,000 to a small company but EEF state the cost would be more like £20,000.

A pay audit involves trying to find comparable roles within an organisation and ensuring that they are receiving equal pay. However, EEF, the British Chambers of Commerce, Federation of Small Businesses and Institute of Directors all agree that pay audits are a waste of time and can last years.

In a letter to ‘The Daily Telegraph’, the business groups state: “Pay audits require an extensive and expensive use of scarce resources and can last years. The Government believes that they will address systemic pay inequality. We do not share this view.

“Proposing a sanction seen as punitive in its intention risks undermining the support of employers in tackling the gender pay gap, which all our organisations are committed to reducing.”

Tim Thomas, EEF’s head of employment affairs, said: “The threat of having to carry out a pay audit will mean that more firms will settle out of court with employees before their case reaches tribunal.”

Related links:
Read more on the story (The Telegraph)
Read about sex discrimination and equal pay (FindLaw)
Find local employment solicitors throughout the UK (FindLaw)

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