Labour would punish firms for not closing gender pay gaps

Labour will fine employers who do not close their pay gaps, the party will pledge on International Women’s Day.

Under a government, the party said all private and public employers who have 250 workers or more would not only have to audit their gender pay, but prove they are taking action to close the gap or face a fine from the government.

The party plans to publicly consult on the policy, including with businesses, trade unions and women’s organisations, including non-departmental public bodies. The government has already introduced a legal requirement for all major employers to publish their data on gender pay and bonuses by April 2018.

Labour said it would go further and impose sanctions on businesses that had significant gaps in the pay of male and female staff. It will propose mandatory certification for large firms to have tailored action plans to close the gender pay gap, to be certified by the government every two years.

Shadow equalities minister Dawn Butler said the party believed companies needed to be sanctioned if they didn’t act on the data. “Auditing is not enough, we need action,” she said.

“Some of the companies are using loopholes to get out of giving the full picture, and then there’s no real enforcement if you are found to have a huge gap. We don’t just want people to identify the pay gap, we want the pay gap to close.”

Labour has already said organisations that can show they are working to close the pay gap are the only ones who will have access to government contracts.

“We will only do business with people paying their employees equally,” Butler said. “It is an incentive for business to pay women better. It is an incentive for progression.”

Employers that fail to obtain this certification would face further auditing and eventually fines, Labour said. Butler said the model would be like Iceland’s policy where employers are fined £355 a day if they do not submit their data or adequate plans to close the gap.

“We’d be looking at doing something similar,” she said. “It’s something that could quickly mount up and that’s why it’s important we look at the business case for doing this.



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