Gender pay gap reporting and what it means for you
We have finally been provided with the details of the gender pay information which employers will need to publish. Whilst the media headlines have…
We have finally been provided with the details of the gender pay information which employers will need to publish. Whilst the media headlines have focused on the potential naming and shaming of employers who fail to report, the importance of the Regulations for most of you will be in the detail of what exactly it is you will be required to collate and publish about your employees’ pay.
What the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 say is the following:
- The information on pay required will be a snapshot as at 30 April 2017. It will apply to the pay period for each employee which includes that date. The obligation will be repeated annually for each period including 30 April each year.
- All employers will have to publish information calculated on the same basis. That means you will have to use the calculations laid down in the Regulations, you will not be able to use your own or include/omit the information you want to.
- You will be required to publish figures which show gender pay difference as a percentage of the average female employee’s pay. There will be two such figures. One showing the difference in mean pay between male and female employees (that’s the average of the total of all employees’ pay), and the other showing the difference in median pay (that is putting all your male/female employees in a line and identifying the pay of the person in the middle).
- The pay to be included in the calculation includes: basic pay; paid leave; maternity pay; sick pay; area allowances; shift premium pay; car allowances; on-call and standby allowances; and clothing, first aider or fire warden allowances. It does not include: overtime pay (which may be important for some); expenses; salary sacrifice; benefits in kind; redundancy pay; arrears of pay; or tax credits. Most bonuses are to be treated differently and will fall outside these figures.
- You will also be required to present a figure which shows the difference in mean bonus pay earned between male and female employees during the period of 12 months preceding the 30 April each year. This longer reference period means that bonuses will be captured whenever they are paid in the year (whereas pay is focused on pay each April). Bonuses are stated to include all profit share and long term incentive payments, as well as the “equivalent value of shares on the date of payment” (whatever that might mean which is likely to be contentious and create a headache for some of you).
- You will be required to report the proportion of male and female employees who received bonus pay in the 12 month period.
- You will also be required to publish numbers of male and female employees in each of the four quartiles of your overall pay range.
- The information will be required to be accompanied by a written statement which confirms the information is accurate and is signed by a director, partner, or the most senior employee.
- The information must be published on your organisation’s website: in English; in a manner that is accessible to all employees and the public; and be kept there for at least three years.
- The information will also be required to be uploaded to a government website, assisting the government in collating the information.
- The government has decided not to impose any requirement on employers to provide other information or to explain the gender pay gap, but you will if you wish be able to add an explanation or other information. In practice for many of your organisations this additional explanation is likely to be very important.
What will this mean for me?
There is one piece of good news for those of you who are in organisations subject to the Regulations, and that is that the date for publication has been left open for employers. Whilst the snapshot must relate to pay at the end of April each year (starting 2017), the information ‘only’ needs to be published within 12 months of that date. That means that the last possible date for publishing information will be April 2018, leaving a reasonably long lead-in period for you to consider what to say. However the information snapshot must relate to April 2017, so you will need to consider now what your pay gap information will look like for pay at that date (and for bonuses this will relate to all paid in the year from May 2016).
We already knew that the Regulations would not apply to employers with fewer than 250 employees and most public-sector employers (that is those subject to the public-sector equality duty). It has been confirmed that this will not be changed, so all private and voluntary sector employers with 250 employees or more will need to publish gender pay gap information.
The Regulations do not have any additional enforcement powers added to what had been proposed. You need to ensure that you comply with the Regulations to avoid being named and shamed, but what will be important about the content of the information posted will be publicity and/or what your employees may say it shows about your organisation (possibly in Tribunal).
It is good that we now have a far greater idea about the detail which will need to be provided. However at the moment these are currently draft Regulations (with a further brief period of consultation about them). We are told the final version will be available by October and guidance will be issued to assist.
The Government has endeavoured to ensure that all employers produce consistent information. They have not required you to provide gender pay information by pay band or grade, but that does not stop you publishing such information alongside the required numbers if it better reflects your organisation’s approach to pay. For some organisations complying with the rules may be relatively simply. For some explaining a gender pay differential may be a problem. For others collating this information may be time-consuming and difficult. This is something you need to start thinking about now.
If this raises any issues for your organisation please speak to your usual contact in the Weightmans employment, pensions and immigration team or contact Phil Allen on email@example.com.