Government considering mandatory gender pay reporting for smaller firms

Equalities Office is also looking into making narratives compulsory, committee of MPs hears

Government considering mandatory gender pay reporting for smaller firms

The government is considering whether to increase the scope of gender pay gap reporting to include smaller companies, and whether to make the publication of an action plan mandatory, a committee of MPs has been told.

Hilary Spencer (pictured), director of the Government Equalities Office, told the Treasury select committee it was considering extending reporting requirements to some SMEs, as well as expanding the range of data collected.

Currently, only organisations with more than 250 employees are required to report, however some smaller firms already do so voluntarily.

Spencer told the committee: “There’s a number of ways we could take reporting in the future. One option is to lower the threshold, another option is to ask for more data on gender, and another is to ask for data about different characteristics.”

When asked over what sort of timescale these changes might happen, Spencer said there was a “pretty crucial window” between the third and fifth years of reporting (2020 to 2022).

“If year one was people getting up to speed with the reporting requirements and year two is trying to start making a difference, you want to start seeing changes between years three and five,” she said. “So our view is there is probably an argument for making some changes to the reporting regime from what will now be year four.

“We’re actively working on that. We’re putting advice to ministers on ways we can take this forward, including ethnicity pay gap reporting.”

Spencer added there would be a formal review of the legislation after 2022.

During the session, Spencer also acknowledged there had been calls from several sectors to make the publication of action plans compulsory, and said the Equalities Office had been “exploring what that might look like”.

“In our view, best practice for an action plan would be that there’s a clear explanation of what the gender pay gap means, why the company or organisation believes that pay gap exists in their organisation, and some clear, targeted next steps about what they’re going to do to make a difference,” she said.

The CIPD has been among the organisations encouraging companies to take steps to provide a narrative explaining gender pay gaps and to produce action plans.

When questioned, Spencer said there had been “extremely high compliance” so far, adding: “There are still a small number of organisations that haven’t reported this year [and] the EHRC is pursuing them.”

Earlier this week, the head of the Equality and Human Rights Commission (EHRC) called to be given more powers to issue immediate fines to companies that fail to comply with reporting regulations.