Mandatory reporting on gender pay inequality inside large companies is to be introduced in England and Wales following a Liberal Democrat warning to Conservative coalition partners that they would back the reform regardless in parliament this week.



It simply cannot be acceptable that women on average still receive a smaller pay packet than men. Nick Clegg

The change, resisted by the coalition for years on deregulation grounds, follows clear evidence showing companies have not introduced gender pay-inequality reporting under a voluntary code.

Research shows only five companies have introduced reporting on pay levels between men and women within their firm. An amendment will now be introduced into the Small Business bill following lobbying by Nick Clegg, the deputy prime minister, and the business minister, Jo Swinson.

All government ministers will be expected to vote in favour when peers vote on the bill on Thursday.

Liberal Democrats, faced by resistance from the Conservatives, agreed to a voluntary approach to pay transparency on the condition that the decision would remain under review, and a mandatory approach introduced if necessary.

A party source said it has now emerged that just five companies have chosen to publish their gender pay gap voluntarily under a scheme introduced three years ago. Labour said it was clear the voluntary scheme was a flop more than a year ago.

These measures will shine a light on a company’s policy so that women can rightly challenge their employer Nick Clegg

The new measures, to be introduced in 12 months, will not apply to companies with fewer than 250 employees. It is expected that firms would be entitled to report annually, and face a fine in the region of £5,000 for non-compliance.

Downing Street said that, at a bare minimum, companies were to look at the hourly rate of each employee by gender and then publish their full-time gender pay gap, part-time gender pay gap and overall gender pay gap.

Companies will be expected to publish the difference between men’s and women’s starting salaries; the difference between average basic pay and total average earnings of men and women broken down by grade and job type; and reward components at different levels, for example bonuses.

Labour legislated for mandatory gender pay transparency in 2009, but said it should not be introduced for four years. At the time, Liberal Democrats argued it should be introduced immediately, but backed off in government and were set to face a Labour-led vote on the issue in the Lords next week.

A total of 270 firms, including HSBC, Tesco and Vodaphone have signed up to the voluntary Think, Act, Report scheme introduced in 2011, but only five companies have so far published their actual gender pay gap.

Welcoming the move, Clegg said: “While the Liberal Democrats have made real progress in areas like shared parental leave and extending the right to request flexible working, the labour market is still stacked against women.

“It simply cannot be acceptable that, in the 21st century, women on average still receive a smaller pay packet than men.

“We can’t wait and we can’t dither. We need to sort this out now. Both Jo Swinson and I have pushed for this to happen within government for a long time.

“These measures will shine a light on a company’s policy so that women can rightly challenge their employer where they are not being properly valued and rewarded.”

A Lib Dem source added: “In discussions this week, it was clear that the Tories wanted to delay taking any action on equal pay and kick the can down the road, just like they have for the last five years.

“This is extraordinary [in the same week as] International Women’s Day, you have some Tories feigning support for women in the economy while dragging their feet on gender pay transparency.

“It’s a huge U-turn from the Tories but it’s welcomed. At last we can take some real action before the election to make companies publish pay differences between men and women.”