Business groups pour cold water on pay transparency plans
Plans to make business tell workers what their colleagues earn have sparked a flurry of warnings from industry chiefs that they will hinder bosses’ flexibility to pay staff fairly, and may not work for smaller employers.
Ministers are currently looking at ways to end pay discrimination, with options including making companies publish remuneration structures and criteria for progression and insisting that firms list salary brackets on job adverts.
The measures, published as part of an industry consultation, are part of an overhaul of equality policies, which also hold public authorities accountable for any socioeconomic disadvantages from their decision-making.
But the contents of the consultation have led several industry bosses to warn of the harmful toll the moves may have on UK businesses.
Alex Hall-Chen, principal policy adviser for employment at the Institute of Directors, told City PM that some of the measures “would only serve to complicate the recruitment processes”, and harm firms ability to “fairly reward performance and experience”.
Meanwhile Federation of Small Businesses policy chair Tina McKenzie warned: “There’s a world of difference between a big business and a small one.
“This is a clear case where it would be excessive for government to impose detailed regulatory rules on small employers who simply don’t have HR departments.”
Transparency troubles
The new rules on pay could be policed by a new Equal Pay Regulatory and Enforcement Unit, the consultation document said, which would be handed powers to issue fines and change employees’ contracts.
Hall-Chen added: “When taken together with the recent NICs increase, the measures contained in the Employment Rights Bill, and above-inflation hikes to the National Living Wage, the current message that employers are getting is that hiring staff is becoming more expensive, risky and complex.”
But other lobby groups welcomed the additional transparency the flagship changes would bring, but warned to expect pay equality issues without sufficient preparations.
Charles Cotton, policy and reward adviser at HR industry body the CIPD, said: “Transparency around pay structures and criteria for progression can help employees understand why they’re paid the salary they’re on and what they need to do to earn more.”
He added: “However, employers might face potential equal pay issues if it emerges an employee is being paid a higher salary than an employee of a different sex who’s doing the same job or a job of equal value.”
A government spokeswoman said: “This government is pro-business and many businesses already go well beyond the requirements of the law in order to support pay equality.
“We are seeking to build the evidence base before deciding whether any changes in relation to pay transparency are necessary.
“By collecting evidence on how best to tackle pay disparities, we will be able to make sure that we maximise the benefits to both workers and employers.”