Companies risk being exposed to bad publicity and reputational damage if they fail to avoid a hidden pitfall in new legislation on staff pay that comes into force next month, a leading law firm warned.

Major employers will have a duty to reveal average salary differences between male and female staff for the first time under laws that take effect from April 6. But Milners, headquartered in Leeds, are urging HR leads to focus “on the words as much as the numbers” when tackling these new demands so disparities can be explained and given context. For the looming legislation surrounding gender pay gap reporting requires employers to publish the information on their own websites every year. It must remain accessible for at least three further years. According to Jodie Hill, a commercial and employment law specialist at Milners, this is could prove a legal minefield for some companies.

“This is one of the biggest changes to employment law this year, affecting an estimated one-in-three of the UK workforce, and it’s crucial that businesses get it right and steer clear of this potential pitfall,” she said. The press, public and pressure groups will be casting a forensic eye over the data and the window it now offers into staff pay. Firms risk exposure to bad PR and damage to their reputation if they fail to seize the initiative and properly explain the reasons for the disparity. It’s vital they focus on the words as much as the numbers in ensuring compliance.”

She added: “Such a narrative is voluntary but we would strongly encourage employers to include one on their website. It affords an important opportunity to provide context for their data, explain any gender pay gaps, and offer reassurance about the actions being taken to narrow the gap. Businesses that fail to publish an explanation, or choose not to do so, are particularly vulnerable to adverse comment or being ‘named and shamed’ as it may appear that they have something to hide or their figures may be misinterpreted.”

Initially, the new legislation requires private sector companies with 250 employees of more to report the differences in both hourly and annual pay between full-time male and female staff. But Jodie warned that the requirement could extend to small and medium-sized businesses to bring the UK in line with Europe, where gender pay gap reporting is increasingly commonplace for any company with just 50 or more staff in some countries. “Research has shown that in the UK the gender pay gap is wider in SMEs with 20 to 99 employees,” she said. “So despite the burden it would generate, it would not be a surprise to see the threshold reduce to include them in the near future. SMEs should be planning ahead for that possibility now.”

As well as mandatory publication of pay differentials on their own website, individual company data will also be made public on a dedicated Government website. Employers believe achieving a diverse workforce is a priority, but are they taking the steps to achieve one? 85 percent of employers say that increasing diversity in their workforce is a priority. 46 percent of businesses have no strategy in place to attract candidates from diverse backgrounds. Recent research from Robert Walters, supported by the Employers Network for Equality & Inclusion (enei), has found that while 85 percent of employers consider building a diverse workforce to be a priority, 46 percent have no strategies or programmes in place to achieve it.

There also seems to be confusion amongst the majority of employers on who is responsible for developing a diversity strategy. 56 percent of respondents believe that senior management should take the lead whilst 35 percent believe it should be an objective of the HR division.  Chris Hickey, Robert Walters CEO – UK, Middle East and Africa comments: “A diverse workforce can deliver tangible advantages for employers in terms of productivity and innovation. While this is widely recognised, relatively few businesses are taking steps to attract candidates from a wide range of backgrounds, potentially preventing themselves from reaching highly skilled professionals and building a diverse workplace.”

The research also found that 73 percent of employers believe that diversity within their workforce encourages creative and innovative thinking. 67 percent of respondents also said that it is important that their workforce reflects the diversity of the community they operate in.

Denise Keating, CEO – Employers Network for Equality and Inclusion comments: “Employers believe increasing diversity in their workforce is a priority, but few put systems in place. Most practices are simple to implement and often cost nothing but can make a huge difference to the diversity of an organisation. Research has shown that effective diversity policies have been linked to improved performance, brand awareness, and the ability to deliver better products and services through creativity and innovation.”