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Government drops plans on equal pay rules

The Government has decided not to go ahead with new rules that would have obliged larger employers to disclose differences in pay between male and female employees.

Lynne Featherstone, the equalities minister, has announced the Government has dropped measures aimed at forcing force companies to publish gender pay data.

Instead, employers with more than 150 staff will be encouraged voluntarily to disclose whether they pay women as much as men.

The Government said it would monitor the number of companies releasing pay information each year in order to assess whether the voluntary approach had been a success. Mandatory reporting has not been ruled out if the results are unsatisfactory.

Ms Featherstone, launching the Government's equality strategy, said: "We want to move away from the arrogant notion that government knows best, to one where government empowers individuals, businesses and communities to make change happen."

However, the Government is to press ahead with a number of the policies introduced under the Equalities Act.

Employers will be able to take positive action in recruiting a more diverse mix of staff, giving jobs to candidates from under-represented groups, including women and ethnic minorities.

Ms Featherstone continued: "It really comes down to the entrenched culture and mindsets that have become institutionalised in some places of work.

"British women don't lack experience, they don't lack ambition and they don't lack skills. The problem is caused by a creeping, unconscious bias."

Other measures set out in the strategy included guidelines to help companies make workplaces more open to homosexuals.

From April next year, employers will be allowed to use 'positive action' as part of their recruitment process. Formal guidance on how the system should operate will be published in the New Year.

The changes mean that employers will be able to take "voluntary positive action in recruitment and promotion processes when faced with two or more candidates of equal merit, to address under-representation in the workforce".

But officials said this would not involve employers taking on quotas or giving someone a job simply because they were female, disabled or from an ethnic minority, regardless of their suitability for the post. Such action would amount to "positive discrimination", which remains illegal.

Katja Hall, the CBI's director of employment policy, welcomed the announcement.

Ms Hall said: "Greater transparency could help companies identify areas of the business where women are under-represented and take steps to redress the balance.

"Lack of applicants is still a barrier for employers looking to diversify their workforce. The ability to choose candidates who are under-represented in the workforce in tie-break recruitment situations could be a useful tool, but employers will need clear guidance on how to use this positive action provision correctly to avoid falling foul of the law."

The Institute of Directors (IoD) wished the Government had gone further.

Miles Templeman, the IoD's director general, commented: "There are signs that this Government is not inclined to force firms to carry out gender pay audits, and that is welcome. There is no justification for the Government using regulation in this area. We believe that the vast majority of businesses are rightly paying women the same as men for the same work."

But he added: "It's a pity that ministers didn't go further and scrap the powers to compel pay audits created by the last Government. Also, we would've have been more assured if a formal commitment had been given today to not introduce pay audits over the course of this Parliament.

"While there may be some instances of illegal discrimination still taking place, we believe this is very uncommon. Instead of leaving pay audits on the table, the Government should have accepted the hard evidence which shows that influences and choices made by women at the pre-employment stage are what generally lead to average gender pay differences."