Small Business Bill To Have Significant Impact on Business

Mar 17, 2015

Written By Billy Sexton, Editor, AllAboutLaw.co.uk

If you think the Liberal Democrats are good-for-nothing, power hungry, semi-Tory bureaucrats… well, think again (not that anyone was accusing them of such behaviour). Their latest move in government shows they’re anything but...

The Liberal Democrats have pushed through an amendment to the Small Business, Enterprise and Employment Bill, which requires the Secretary of State to make regulations for the publishing process of differences in pay between males and females at the same company. The Bill essentially ‘activates’ section 78 of the Equality Act 2010, where it is outlined that “Regulations may require employers to publish information relating to the pay of employees for the purpose of showing whether… there are differences in the pay of male and female employees.” This only applies to companies who have more than 250 employees and requires information to be published every year. It’s understood that the minimum an employer can do to meet their legal obligation would be to publish information on any full-time gender pay gap, part-time gender gap and an overall gender pay gap.

This is a great move for social and pay equality, particularly when it was revealed that in 2014 women essentially worked from November 5 until the end of the year for free. Indeed, the legal profession itself was humiliated when it was revealed that full-time female solicitors earn, on average, £10,000 less than their male counterparts. A number of firms have also set targets for women partnership, including Taylor Wessing and Herbert Smith Freehills.

Lorraine Hear, Employment Legal Director at Bond Dickinson, outlined how the new regulations were the “result of the Conservatives giving in to pressure from Liberal Democrat and Labour MPs to force large employers to do more to eliminate the gender pay gap, which currently stands at 9.4% for full time employees and almost 40% for part timers.”

So how is this new obligation set to affect businesses?

Legal Issues

Non-compliance with the new regulations will land employers in legal hot water. They could be fined £5,000 and be subject to enforcement action to ensure that a report is published.

However, the legal issues don’t just stop here. Publication of any pay disparities between men and women carrying out the same job could lead to workers launching a legal dispute. Litigation can be costly and, according to Shoosmiths, compensation can be unlimited. We only need to look at North v Dumfries and Galloway (2013), where it was deemed that pay discrimination had occurred where men working as groundsmen, refuse collectors and leisure attendants were paid bonuses, but women working as nursery staff, classroom assistants and support-for-learning assistants were not paid bonuses. At the time, it was expected that similar cases would result in £12m being paid out by 20 other local authorities.

Bad Press

Obviously employers want to stay on the right side of the law and prevent litigation where possible. It’s costly and can lead to negative press.

However, the new legislation could lead to more litigation and, consequently, more bad press. With the ol’ internet and social media making people more aware of their rights and their employers’ obligations, the publication of reports where unequal pay is evident could provide much needed proof to those suffering from discrimination. It could also prompt them to take their case to the courts and to the press also.

Specific pressure groups and charities will also apply more pressure to business who fall short of their legal obligations. For instance, organisations such as the Fawcett Society have been actively campaigning for an implementation of section 78 of the Equality Act 2010. Belinda Phipps, chair of the charity, said that the charity would now seek to pressure companies where a pay gap exists to "produce a robust plan to eliminate any discrepancies" but also highlighted the importance and achievement of the publication of such findings in the first place.

For businesses that may be affected, prevention is always better than cure, and they can avoid these issues by ensuring that there are no gender pay gaps to begin with. Legal experts are able to assist large companies in adhering to their legal obligations, such as delivering workshops and training to management to ensure the right policies and contractual terms are in place.

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