New reforms 'could mean thousands of firms exempt from gender pay gap reporting'

The government's move to "cut red tape" could mean tens of thousands of businesses are exempt from reporting on gender pay gaps, non-profits have warned.

Liz Truss announced on Sunday that the threshold for what constitutes a small business will rise from companies with up to 50 employees to those with up to 500.

The government said this new classification, which came into effect on Tuesday, would apply to all new regulations under development. It would also cover those under current and future review, including retained EU law.

In a statement, the government said the shift means around 40,000 businesses will be "freed from future bureaucracy and the accompanying paperwork that is expensive and burdensome".

But the Trades Congress Union, which represents millions of workers, said the change was a "reckless and cynical" attempt to "rip up" employees' rights.

“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, risk disappearing overnight for employers with less than 500 workers," TUC general secretary Frances O’Grady said.

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“Scrapping gender pay gap reporting for businesses up and down the country would turn the clock back for women at work. And ditching reporting on pay ratios for these businesses would be a boon to greedy bosses."

Median hourly pay for full-time employees was 7.9% less for women than for men in April 2021, according to the Office for National Statistics (ONS).

Working mothers group Pregnant Then Screwed criticised the government for "quietly" bringing in a change that means thousands of women "no longer have the information they need to lobby for change from their employer".

In response to concerns about gender pay gap reporting, the prime minister’s official spokesman said that the Department for Business, Energy and Industrial Strategy would be setting out further guidance for firms, adding that he did not have the “granular” detail yet.

He said: “Clearly, we would make sure to do this in a proportionate way to ensure that things like workers rights and other standards are protected while striking that balance about not placing undue burdens on businesses.”