These reforms affect employers in the private and third sectors with 250 or more employees.
They will be required to report on their gender pay gaps on their websites within the period of 12 months from 30 April 2017. This means they will have until April 2018 to do so. The Government will then collate the information and publish the data in tables.
This is set against a background of the UK Government indicating that there is still a gender pay gap between males and females of around 20%.
The Government does not envisage introducing any civil penalties at the present time but will keep that issue under review.
It is believed that these reforms will affect around 8,000 employers in the private and third sectors.
Gender pay gap reporting already exists for employers who are listed public authorities where they have 150 or more employees. The Scottish Government has already separately announced plans to extend such reporting to listed public authorities with 20 or more employees. It is estimated that this will impact around another 70 employers in that sector.
What will this mean in practice?
The Government's aim is to ensure that there is equality of pay between genders in the work place. This is described by them as "an absolute priority".
Previous attempts to encourage private sector employers to voluntarily publish their gender pay gaps fell on deaf ears.
In the future employees and potential employees will be able to look at an organisation's website to see the gender pay gaps as well as shareholders and other interested parties.
However, as is widely known, a gender pay gap does not necessarily mean that an employer has an equal pay issue. There may be a variety of other factors. One of those factors could highlight another potential problem namely a failure to promote women into managerial posts without good reason- the glass ceiling syndrome. Again the Scottish government has separately announced that it intends to tackle that issue at boardroom level through future reform.
It is being suggested in some quarters that this will result in the "naming and shaming" of non compliant employers. This is the approach the Government is taking for employers who are not paying the minimum wage. Since October 2013 the Government has "named and shamed" 490 such employers. Whenever a major employer has been identified (and there have only been a few) this has resulted in significant press attention.
In the case of gender pay gaps if an employer does not report on time then this will clearly present a problem which is likely to be highlighted given the long lead in time for employers to get their house in order.
However a gender pay gap may not in itself indicate the employer is breaching any law unlike a clear failure to pay the minimum wage.
The Government has indicated that it will provide guidance to employers including the voluntary narrative that employers may wish to produce to explain why there may be a gender pay gap. In some cases this may show there are legitimate reasons for such gaps. How employers explain such differentials will be key to maintaining good employee relations and avoiding adverse PR or claims.
However the worry will be for those employers who have not even identified they have an issue or know they have an underlying problem.
One key issue is the Government's proposed definition of "pay" for comparison purposes. This will include normal pay, maternity pay, shift premiums, bonuses and other types of pay including car allowances. However it will not include overtime which sometimes accounts for a gender pay gap as many males tend to work more overtime bumping up their pay.
The proposal is that employers will need to publish their overall mean and medium gender pay gap. They will also have to separately publish the mean gender bonus gap being the difference in mean bonus payments between men and women expressed as a percentage.
A recent survey showed that females in full time employment earn marginally more than men in the 22 to 29 and 30 to 39 age groups but men between 40 and 49 earn 13% more rising to 17% for men aged 50 to 59. This is thought to be attributable in part to women taking time out for childcare.
Employers who have not already identified that they may have a gender pay gap issue will require to take action to make this a priority. Their concern may be that an equal pay audit will provide uncomfortable information that they may not wish to share at least until the reporting requirements kick in. Their only way of safely doing so is to use their legal advisors to take advice on the matter thereby attracting legal professional privilege which means such information should not have to be disclosed. This might give employers who have such a problem the breathing space to resolve these before they have to disclose their gender pay gap statistics.
The minority of employers who have an inequality problem who do not address this issue may well find they are driven to do so for a variety of reasons. Leaving aside potential claims they may become less attractive to recruits when comparative gender pay data is published. If the employer is tendering in the public sector this may well become an issue which is taken into account as part of the tendering criteria.
Whatever way you look at it the pressure will be on those employers who need to change their ways and to that extent these reforms are likely to further narrow the gender pay gap.
With more women being recruited into the professions and into managerial roles the gap is likely to narrow. However I believe we are a long way off from the suggestion made this morning that there will soon be a gender pay gap reversal with the government needing to appoint a Minister for Men to fight their inequality issues. That would indeed be some turnaround that no one 5 years ago would have predicted.