Firms that employ more than 250 staff will be obliged to make public figures showing average hourly rates paid to male and female employees under the terms of the new Equalities Bill.
The Bill will require employers, as from 2013, to publish details of average pay for men and women.
Gagging clauses that prevent employees from revealing details of their pay are also to be outlawed by the Bill.
The measures form part of a massive reform of some 100 pieces of equality legislation, and the Bill is likely to become law by early next year.
As well as addressing gender pay gaps and making pay audits compulsory, the Bill aims to prevent age discrimination outside of the workplace and to reduce class inequality.
Public authorities will have a duty to tackle discrimination based on social background, while employers will be allowed to prefer someone from an under-represented group when choosing between two equally suitable candidates without running the risk of a discrimination claim.
However, positive discrimination, in which a less well qualified candidate is offered a job because they come from a minority group, is to stay illegal.
Other proposals include a ban on age discrimination in the provision of goods and services. With travel insurance, for example, the cost must be based on actual risks rather than arbitrary age categories.
There will be greater workplace protection for those with relatives in need of care, which means that employers will not be allowed to treat employees unfairly just because they look after an older relative or a young child.
On the issue of gender wage transparency, Harriet Harman, the Minister for Equality, said: “This is about employers coming clean with their employees. Unless we can see it workplace by workplace it stays swept under the carpet – that unfairness stays hidden and we can’t tackle it, if it’s hidden.”
Commenting on the timing of the introduction of the Bill during a recession, Ms Harman went on to say that there was no excuse for having unfairness when conditions are tough.
The Minister argued: “The economies and societies which will prosper in the future are not those that have rigid hierarchies, where women know their place and where you canπt go forward because of the colour of your skin.”
Business groups offered a mix reception to the Bill.
Katja Hall, the CBI’s director of HR policy, said: “We support the clarity and simplification that the Equality Bill achieves. Businesses want to see more diversity at senior levels, and clear guidance on new positive action proposals will help.
“The CBI had called for the extension of positive action to enable companies to reach out to communities and groups. When minorities are underrepresented in a workforce it is often because of a lack of job applications from a particular community, and this Bill should help firms to use outreach programmes.”
However, Miles Templeman, director general of the Institute of Directors, said: “This is a further example of unnecessary regulation at a time when companies, particularly small and medium-sized enterprises, are struggling to survive.”
David Frost, director general of the British Chambers of Commerce, added: “This Bill will discourage job creation and make employers fearful of the recruitment process. We already know that half of small firms struggle to navigate employment law and this will just add to the problem.
“The government commitment not to introduce mandatory gender pay audits until 2013 is not worth the paper it is written on. 2013 does not feature in the Bill itself so the government could easily withdraw this commitment and implement audits much earlier.”
The CBI, too, was unhappy with the plan to make pay audits compulsory.
Katja Hall commented: “The Bill proposes that firms could be made to publish their average female and male pay, which may sound like a good idea until you consider the consequences.
“Companies that have too few women in higher paid roles, and are trying to attract more, could be forced to publish a statistic that would deter female applicants and compound the problem.
“The gender pay gap can be misinterpreted. It does not compare men and women doing the same job. It reflects the fact that fewer women have higher paid jobs and the way to address that is not by comparing misleading average pay rates, but by improving opportunities for women via better childcare and careers advice.”
