It is not unusual for the differences between the gender pay gap and equal pay to be blurred. The two focus on the same concept, ensuring that women receive the same pay as men in the workplace, but they are two separate issues which place different obligations on employers.
Equal pay relates to men and women receiving equal pay for equal work, whereas, the gender pay gap is a measure of the disparity in pay between the average earnings of male and females. It does not relate to equal work and, instead, relates to other factors such as part-time working, taking time out of work for family and caring responsibilities and returning to work in lower roles.
Under the Equal Pay Act 2010, employers are legally obliged to pay men and women equally where they are carrying out equal work. This is not as straightforward as it appears because equal work covers those doing 'like work', 'work rated as equivalent' and 'work of equal value'. Some employers struggle with this determination and may need to have a job evaluation carried out to review the equivalence of work in their business. Differences in pay between men and women can be justified by employers if there is a genuine material factor unconnected to gender which explains the difference. This includes factors such as location, market forces and levels of experience.
Until recently, employers have not been required to take any action with regard to the gender pay gap, however, this has changed with the introduction of gender pay gap reporting for large employers. New laws require employers with 250 or more employees to review pay data from April 2017, calculate information such as the overall mean and median pay gap and publish a report by April 2018. Whilst the reporting requirement does not force employers to fix the gap in their business, it will alert employers to this issue in their business so they can take action if they wish.
The failure to comply with equal pay laws can leave employers facing an expensive tribunal claim. Successful claimants are entitled to receive the difference in their pay for up to six previous years, including interest. Currently, there are no financial penalties in place for employers who do not publish their gender pay gap report. It is expected that any companies who fail to comply with this requirement will be publicly 'named and shamed' so they may face reputational damage and this could have a knock on effect on recruitment and retention.