Gender pay gap details to include bonuses

  • Men and women's legsImage copyright PA
Image caption A significant pay gap opens up between men and women who are over 40

Larger employers will have to publish the amount awarded to men and women in bonuses as part of proposed legislation to reduce the gender pay gap.

The planned regulations will apply to businesses in England, Wales and Scotland with more than 250 employees.

Women and equalities minister Nicky Morgan said the move was a “first step” but would “concentrate minds”.

The TUC said the measures should include medium-sized businesses and come with fines for non-compliance.

The Chartered Management Institute said the new legislation would “force transparency” on companies.

The plan on bonuses is the first of a number of “equality-boosting measures” to be set out in detail this week and hopefully introduced in the first half of 2016, according to Downing Street.

Other steps include:

  • Every company with more than 250 employees will be required by law to publish the difference between the average pay of their male and female employees
  • The requirements will be extended to the public sector as well as private and voluntary sector employers
  • A target to include women on the boards of all the UK’s top 350 companies will be introduced – after the aim of getting women into at least a quarter of boardroom seats in FTSE 100 firms was met

Details of exactly what companies must publish and when the scheme will begin will be announced after the results of a consultation, which concluded in September, are released.

‘Concentrate minds’

More than 10 million workers will be covered by the new transparency rules – although far fewer than that receive bonuses.

The measures are contained in the Equality Act 2010, which was introduced by Labour but blocked from implementation by the Conservatives until now.

Latest figures show that, overall, women in the UK earn 19% less than men.

Up to the age of 40, there is very little difference between the earnings of men and women.

But beyond that age, when more women are likely to have taken time out to raise families and work part-time, there is a significant gap.

TUC general secretary Frances O’Grady said publishing salary and bonus information was a “start” – but employers needed to look at why women were still being paid less than men and “do something meaningful about it”.

Ms Morgan said the government was “going further than ever before to ensure true gender equality in the workplace”.

She also told the BBC’s Andrew Marr programme: “When companies see the gender pay gap in their own company, of their employees, including bonuses, that does start to change behaviours; it [starts] the conversations in the company.”

Woman in an officeImage copyright Thinkstock

Chartered Management Institute chief executive Ann Francke said bonus gaps were “one of the biggest drivers” of gender pay discrepancy, particularly at senior levels.

“Bonuses are also where gender bias can creep in easily as they are amongst the least transparent forms of pay,” she said.

“There’s a tendency to reward those in our own image or to think that because men may be the ‘main breadwinners’ they deserve higher bonuses.

“And men often negotiate harder or trumpet their achievements more readily.”

She told BBC Radio 5 Live the new legislation would mean many companies were going to say, “I didn’t know we had a problem but we do.”

‘Guaranteed rights’

In July, Prime Minister David Cameron pledged to end the gender pay gap within a generation, but Labour called for “action not words” on equality.

Shadow women and equalities minister Kate Green said the gender pay gap was nearly 20% more than the European average.

“British women don’t need warm words – we need guaranteed rights at work, properly enforced,” she said.

CBI director for employment and skills Neil Carberry said eradicating the gender pay gap was an important goal, but reporting must be “relevant to each company rather than a box-ticking exercise”.