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Risk in Context

Gender Pay Gap Reporting Deadline Quickly Approaching

Posted by Eleni Petros 11 January 2018

It was recently reported that the Equality and Human Rights Commission has commenced an investigation into a high-profile organisation and is seeking further details of its pay policy following complaints by a female employee. If the commission finds that the organisation did not pay its male and female employees equally for carrying out the same work, it could face prosecution for breaching the 2010 Equality Act.

A situation such as this could happen to any organisation, and with the deadline for Gender Pay Gap reporting quickly approaching, the differences between men and women’s pay is firmly in the spotlight.

Under the Gender Pay Gap Reporting Rules, employers in the UK with 250 staff or more are required by law to report the difference in pay between men and women by 4 April this year. The majority of companies are yet to report their figures, with only 550 out of the estimated 7,000 employers having uploaded their report to the government website to date. Of those, the differences mean hourly rates at some of the UK’s biggest companies are as much as 52%. 

The Gender Pay Gap records the discrepancy between the average and mean wage earned by men and women at a company, regardless of their position. This is different to equal pay, which is the legal requirement that men and women be paid the same amount for equal roles under the Equal Pay Act 1970. Failure to comply with equal pay laws is deemed “an unlawful act” and the Equality and Human Rights Commission can take enforcement action against offending organisations. 

While there is, at present, no penalty for failing to report under than Gender Pay Gap rules, the commission recently announced that businesses failing to comply with Gender Pay Gap reporting could face unlimited fines and convictions. Not reporting, or reporting a significant gap in pay figures, could also lead to reputational damage and issues with attracting talent.

Reporting a Pay Gap Increases Risk

Gender pay reporting will further heighten awareness of equal pay issues. The statistics are likely to be used by employees to question things such as whether they are being paid equally and whether their bonus payments are tainted by sex discrimination.

As well as potentially facing claims under the Equal Pay Act, companies reporting a gender pay gap could face reputational damage, potentially leading to disgruntled shareholders claiming that senior management failed to properly manage the risk. As a result, senior managers could find themselves in the firing line.

We could also see a rise in claims against those employers stemming from perceived gender discrimination, lack of work/life balances, or pregnancy/maternity leave discrimination.

Eleni Petros