After publishing the information, organizations are encouraged to explain the reasoning for any pay gaps. Just because there is a pay gap between men and women doesn’t necessarily mean that it’s illegal. Factors such as experience, educational background, and skill are all viable factors for substantiating the pay gap. What this initiative is creating, however, is transparency. If the gap exists, under the new UK law, it must be identified and substantiated with legitimate reasons. It also allows organizations to address and correct problems if they exist.
The reporting mandate for gender pay gap aims to reinforce the UK’s Equality Act 2010, which affects Wales, Great Britain, and Scotland. The Act protects employees who may face pay discrimination relating to age, disability, gender reassignment, marriage, pregnancy, race, religion, sex, and sexual orientation. If an employee feels that pay discrimination for any of the above characteristics is occurring, they may submit a claim to the national Employment Tribunal, a government entity established to address disputes between employers and employees.
During 2016, there were a total of 16,870 claims made for infractions of pay equality. During 2017, that number jumped to 23,708. The reason for the jump was the removal in late July 2017 of the Claims Employment Tribunal fee charged by the courts. The removal of the fee led to employees filing 40% more claims of pay discrimination from August through December 2017. The removal of the claims fee, along with requiring organizations to report on the gender pay gap disparity, is expected to result in even larger numbers of claims for 2018.
The UK has wasted little time enforcing the new law. Penalty assessments have already been issued to organizations failing to comply with the new regulations. At the moment, there is no cap on the penalty amount that can be assessed on organizations who fail to comply.
As pay equity laws continue to gather momentum, it’s important to recognize their purpose. Aside from the obvious benefits of enforcing equal pay among protected classes, and encouraging employees to speak up about discrimination, some of the following benefits have also been identified with respect to employees:
• Reduced turnover
• Attracting better employees
• Increased commitment
• Reduced absenteeism
• Increased productivity
These are all major perks for organizations that are committed to creating pay equity among employees. Doing so will make for a happier work environment. Happier people equals better results.
What does this mean for the United States? Probably not much at the federal level in the current political climate, as Congress has so far refused to take up consideration of the Paycheck Fairness Act. However, progressive policies in Iceland and the UK, if successful, provide a template for pay equity advocates to follow.
Already in the U.S. in 2018, 15 states, including most recently New Jersey and Washington, have set forth stringent state laws to enforce pay equity under the Equal Pay Act. Many other states are following close behind.
If organizations haven’t already begun to take proactive measures to ensure they are complying with pay equity practices, they might want to start doing so. Take corrective action today. A “British invasion” of pay equity regulation may have more of an impact in the U.S. over time than we may realize.