Pay transparency and the persistent gender pay gap remain critical issues in the quest for workplace equality. Since the landmark Equal Pay Act 1970 took effect in 1975, it has been a legal requirement in the UK that men and women receive equal pay for performing “equal work.” Yet, despite significant progress, inequalities persist, underlining the need for ongoing legislative and organisational efforts.
Understanding Equal Pay vs. Gender Pay Gap
Equal Pay: The Legal Framework
The principle of equal pay applies to three types of work:
- Like Work: Jobs requiring similar skills and responsibilities.
- Work Rated as Equivalent: Roles evaluated as equivalent through formal processes based on skill, effort, and responsibility.
- Work of Equal Value: Jobs differing in nature but equal in terms of skill, training, or responsibility.
Gender Pay Gap: The Bigger Picture
The gender pay gap measures the average difference in pay between men and women across an organisation or sector, highlighting systemic issues rather than individual discrimination. Since 1997, the Office for National Statistics (ONS)has monitored this gap, revealing gradual but insufficient progress.
Recent Trends in the UK Gender Pay Gap (Full-Time Employees):
- 2017: 8.6%
- 2024: 7.0%
For all employees, the gap has decreased from 18.1% in 2017 to 13.1% in 2024. Despite these improvements, factors such as job segregation, motherhood penalties, and lack of women in leadership roles continue to drive disparities.
UK Pay Gap Reporting: Obligations and Shortcomings
Current Requirements
- Private and Voluntary Sectors: Organisations with 250+ employees must publish gender pay gap reports.
- Public Sector: Similar reporting obligations exist under separate regulations.
Action Plans: The Missing Piece
While reporting identifies gaps, there’s no legal obligation for employers to explain or address disparities. The new Labour government aims to bridge this gap by mandating action plans for reducing pay disparities and introducing reporting requirements for ethnicity and disability pay gaps.
Lessons from the EU: The Pay Transparency Directive
The EU Pay Transparency Directive, adopted in 2021, represents a significant step forward. Effective from June 2023, it requires member states to:
- Implement mandatory pay gap reporting with detailed breakdowns.
- Conduct pay assessments for disparities exceeding 5%.
- Prohibit inquiries into candidates’ pay history.
- Increase worker access to pay-related information.
While the UK is no longer bound by EU law, the Directive’s provisions may influence UK employers operating in Europe, potentially setting new benchmarks for transparency.
Looking Ahead: Bridging the Gap
A Vision for Transparency and Equity
Achieving meaningful pay equity requires:
- Stronger enforcement of equal pay laws.
- Enhanced transparency, including mandatory action plans.
- Cultural shifts to support women in leadership and eliminate motherhood penalties.
The Role of Employers and Government
Employers must embrace not only compliance but also proactive measures to foster workplace equality. Meanwhile, the government’s commitment to broaden reporting obligations and introduce action plans marks a promising step forward.
Conclusion
The journey towards pay equity is far from over, but each measure—from equal pay enforcement to enhanced transparency—brings us closer to a fairer future. As the UK navigates its path post-Brexit, embracing global best practices and prioritising accountability will be key to driving lasting change in pay equity.