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Equality Bill

My Lords, Amendments 24, 25 and 26, in the names of the noble Lords, Lord Lester and Lord Wallace, and the noble Baroness, Lady Northover, are the same as those which the noble Lord, Lord Lester, moved in Committee. At the outset I should say that, like both noble Lords opposite, we all agree that the current pay gap is unacceptable. We all share the same aim. We all want to reach the same destination, but we differ on the pathways to be followed. Amendment 24 would mean that the voluntary arrangements for publishing gender pay gap information being sponsored by the Equality and Human Rights Commission were not given any time to work. A Minister would have to make regulations under Clause 78 as soon as the clause was brought into force. The Government appreciate the contribution of the commission and its partners in working out options for measuring the gender pay gap, and of course we regret that the partners were ultimately unable to agree to the menu of options that the commission decided on. We would clearly have preferred employers’ organisations still to be engaged with the process. We hope that they and individual employers will recognise that real benefits are to be had in participating and helping to shape the future agenda on pay transparency rather than standing on the sidelines and perhaps having one imposed on them at some point. The commission is currently developing guidance for employers, which I understand will be published within the next few weeks and disseminated as widely as possible to the target group—some 7,000 private and voluntary sector employers which employ at least 250 staff each. They are on track, and we stand by our policy of giving larger employers the chance to demonstrate their commitment to change on a voluntary basis, thereby making resort to the reserve power in Clause 78 unnecessary. As I explained in Committee, that power could be exercised so as to require employers to find out where men and women are doing equal work or work of equal value and to collate pay data to identify gender pay gaps. The power could not, however, be used to require employers to analyse the data so as to establish the causes of any gaps identified, not all of which will be due to sex discrimination. By contrast, Amendment 25 would effectively require employers to have analysed the data they had collated to establish the reasons for any pay gaps identified, prior to publishing information only about discriminatory differences in pay. That is, I suggest, hardly an incentive to make gender pay gaps more transparent. With the greater transparency that publication of the data under our proposals will bring, employers could be more exposed to claims if the data showed a marked gender pay gap. Accordingly, it would be in an employer’s own interests to analyse the published information to establish the reasons for the gap. However, we do not think it appropriate that they should be obliged to do so in all cases or to publish only discriminatory differences in pay. Amendment 26 would apply the clause to employers with 100 or more employees instead of only to those with 250 or more. The noble Baroness, Lady Morris, asked why the number should be 250 and not 100. We opted for a 250-employee threshold because employers with fewer staff are classed as small and medium-sized enterprises and it is not as simple or as inexpensive for them as it is for larger employers to collate information about their gender pay gaps. I should also say that these employers employ around 40 per cent of those who work in the non-public sector. However, smaller private and voluntary sector employers are free to publish information about their gender pay gaps if they want to, regardless of Clause 78, and we encourage them to do so. I should add that a 100-employee threshold would be lower than that which we propose to apply in the public sector, which would clearly not be desirable. We will require public authorities with 150 or more employees to publish annually details of their gender pay gaps. Amendments 23 and 27, tabled in the names of the noble Baronesses, Lady Warsi and Lady Morris, are the same as amendments moved in Committee. These amendments would remove Clause 78 and introduce a new clause. We had a full clause stand-part debate on that occasion, so I hope that the noble Baronesses will forgive me if I do not repeat what I said then to explain why Clause 78 is in the Bill. It is on the record. Amendment 23 would require employers that were found to have breached the equal pay provisions of the Bill to conduct a pay audit and publish the results. I set out in Committee the reasons why the Government believe that this measure would make very little difference in practice to closing the gender pay gap, and our reasons have not changed. The reasons are that very few equal pay claims succeed at tribunal; the proposed new clause would not affect in any meaningful way organisations in the private sector, where the vast majority of people are employed; and more than 98 per cent of equal pay claims that reach an employment tribunal involve public sector bodies, most of which have already conducted pay audits—indeed, the results of these audits are often the reason why a case has been brought in the first place. The proposed new clause also removes any discretion from employment tribunals and would lead to their ordering pay audits where they may be inappropriate—for example, where the employer has recently conducted a pay audit. Of course we agree on the need to close the gender pay gap, but the noble Baronesses’ proposals would make very little difference in practice. We believe that they could be regarded as punitive and arbitrary. The noble Baroness asked a series of questions. She said that the CBI said that the metrics are capable of being manipulated or varied. That is why the EHRC is producing guidance on how employers should use the assessments in the menu of options. The commission will monitor how employers are deploying the options, which will help us to decide whether these are the right measures to prescribe if it becomes necessary to use the power in Clause 78. The noble Baroness also suggested that the clause imposes disproportionate, bureaucratic, costly and time-consuming burdens on businesses at a time of recession. Fairness and equality are not things that we drop at the first sign of a downturn and we believe that, at such times, these matters are even more important. I am sure the noble Baroness agrees with me on that point. As for the metrics proposed by the commission, there are, as the noble Baroness suggested, three options for measuring pay differences plus a narrative approach which would have to be combined with at least one of the three measurement options. The first of the three options for measuring the gender pay gap is to calculate the difference between the median hourly earnings of men and women by reference to all female employees’ median pay and all male employees’ median pay. That is sometimes called the single figure measurement. The second option is to measure the difference between the average basic pay and total average earnings of men and of women by grade and job type. The third is to measure the difference between the starting salaries of men and of women. The narrative approach would explain the context, explore and analyse the causes of any gender pay gaps, describe workforce involvement in addressing the issues, and seek lists of the actions being taken. It is not for the Government to endorse or criticise a particular metric put forward by the EHRC. The commission has worked hard with its partners to identify options that might work for a particular employer. Our main concern is that the menu of options proves to be fit for purpose so that an increasing number of target employers will take them up over the coming months. However, we will only know if this is the case in the years to come as we and the commission monitor progress. I recognise the point that we have reached in the discussions which have taken place. However, we hope that employers will see that embracing the EHRC’s menu of options is in their own interests, acting as a means of attracting and keeping a high-calibre and diverse workforce and as a signal to potential clients that they are forward-looking and progressive concerns with which to do business. I also note that the EHRC has said that there is scope for further consultation, which I welcome. It has said that, ""we will take this forward during the preparation of guidance on the measures that we are proposing, with a view to achieving a greater degree of convergence and we look forward to continuing the dialogue with key stakeholders"." We hope that that dialogue will continue swiftly. In the mean time, I ask the noble Baroness to withdraw her amendment.