‘Botched Tory economics’ | New mandatory reporting threshold - which workers will it affect?

New mandatory reporting threshold - which workers will it affect?

The government’s change to reporting thresholds is set to impact thousands of businesses around the UK – with experts saying it will mostly harm women and allow ‘big bonus’ CEOs to keep rightful pay from workers.

In a press release issued on Sunday, 2 October, Liz Truss’s Conservative Party government announced that the threshold for the size of companies which are required to report on pay has risen from 250 employees to 500. The press release, entitled ‘Red tape cut for thousands of growing businesses, announced that, “Thousands of UK businesses will be released from reporting requirements and other regulations in the future.”

But what has changed, and what is the reasoning behind it? And more importantly, how will it make working conditions worse for the millions of UK workers it will impact?

In brief:

  • any organisation which employs more than 500 people will not be affected by the change

  • organisations which employ between 250 and 500 people will now be exempt from mandatory reporting (government estimates that this is around 40,000 organisations)

  • businesses with fewer than 500 employees will be released from reporting on things such as the gap between what they pay men and women (gender pay gap) and on what executives earn, including bonuses

  • the government has announced it may move the threshold up further in the future, to organisations with fewer than 1,000 employees exempt from reporting

  • the press release notes that “These are not blanket exemptions, and they can be overridden in appropriate cases”

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While Truss’s team has announced the plans as “boosting productivity and supercharging growth”, the government seems to have either unwittingly or wilfully ignored the huge negative result that this could have on worker’s pay, including gendered pay preferences still steering favourably toward men, and top brass collecting huge bonuses will refusing small pay rises for their workers.

A token statement that “The exemption will be applied in a proportionate way to ensure workers’ rights and other standards will be protected” notwithstanding, the government has not addressed the concerns that union bosses, diversity & inclusion specialists – and anyone who wishes to see fairer payments for workers – have raised.

Union and HR expert concerns

Kate Palmer, HR Advice & Consultancy Director at Peninsula, told HR Grapevine, “We must remember that the law on equality is not being removed - the requirement to pay employees equally remains, as does the enforcement system. The introduction of gender pay gap reporting has increased awareness of equal pay over recent years and may have further educated the UK’s workforce on what’s right and what’s not, empowering them to question their employer on any perceived discrepancies.”

Palmer has some stern – and accurate – words of caution, though, for businesses who saw the reporting mandate as something they were forced to do, rather than as an extension of a culture and practice of equality.

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“Businesses will need to ask themselves whether they simply saw the reporting requirement as a tick box exercise or if they embraced it as an essential tool to help them ensure that gender plays no part in pay decisions, either directly or indirectly,” she says.

Palmer continues: “Hopefully, the benefit of the analysis – both in terms of assessing organisational risk as well as the furtherance of equality - has been seen and businesses will continue to voluntarily report, or simply continue analysing their data in house.”

Frances O’Grady, General Secretary for the Trade Unions Congress, was even sterner in her caution to organisations who see this as a relief, saying: “Make no mistake. These changes represent real threats to workers. Yet again we are seeing reckless and cynical deregulation being pushed through with no consultation and no real thought for the impacts on working people.

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“Obligations on businesses which were put in place to help improve the lives of working people, like reporting on gender pay gaps and executive pay ratios, are set to disappear overnight for employers with less than 500 workers,” she explains. “Scrapping gender pay gap reporting for businesses up and down the country risks turning the clock back for women at work. And ditching reporting on pay ratios for these businesses will be a boon to greedy bosses.

O’Grady underlines her distaste for the decision, saying: “Not content with throwing the economy into turmoil, Tory ministers now have their sights set on business and employment regulation too.

“Let’s be clear. It’s not regulation that’s holding business back – it’s botched Tory economics which has led to low pay, depressed demand and continuous uncertainty.”

While this move will certainly give very small businesses some of the time back they spent compiling, analysing and reporting the data, it seems inevitable that bad leaders will use this to, essentially, pay people less.

Do you agree with the move? Let us know in the comments below!

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