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Gender pay gap reporting – what you need to do now

Equal pay and the gender pay gap have been a hot topic for some time now. Public sector organisations have been the subject of thousands of equal pay…

Equal pay and the gender pay gap have been a hot topic for some time now. Public sector organisations have been the subject of many thousands of equal pay claims over the past decade and now the Government is committed to tackling the gender pay gap in the private sector. 

In February the government published the draft Gender Pay Reporting Regulations requiring organisations with over 250 employees to publish figures which show average pay gaps for both basic pay and bonuses. According to the Regulations, a ‘snapshot’ report will be required on 30 April 2017 with the first full report due in April 2018 (with subsequent reports each year thereafter).

Details of the pay gap will need to be published by organisations on their searchable websites and also uploaded on to a government sponsored website.

How much detail will be required?

If you are covered, you will be required to disclose the overall mean and median pay gaps for “pay” and over all mean pay gap for bonuses.

“Pay” includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay and other pay (such as car allowances paid through the payroll, on call and standby allowances). It does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits.

Bonuses will include payments received and earned in relation to profit sharing, productivity and performance based payments, incentive pay, piecework, commission, long-term incentive plans and the cash value of shares on the date of payment (whatever that means). Organisations will also be required to disclose the proportion of men and women receiving these bonus payments.

Employers will be required to report on the number of men and women in each quartile of their pay distribution. Quartiles split an ordered data set into four equal groups, where each group contains a quarter of the data. Employers will calculate their own salary quartiles based on their overall pay range. 

What are the implications for employers?

Being forced to publish any inequalities in pay could have a number of significant and harmful implications for companies including negative publicity, reputational damage and the costs associated with employee claims for equal pay potentially going back six years. The worry for employers is that they may be opening a ‘can of worms’, especially following publicity about significant awards following equal pay litigation in the public sector and no-win no-fee solicitors looking to target large private sector organisations.

Where organisations do not comply with the Regulations and equal pay claims do arise, a Tribunal may be influenced by the fact that a pay audit has not been carried out. They will certainly scrutinise what your gender pay gap information shows and what you have had to say about it.

Should I be doing something now?

It is important to be proactive and carry out an equal pay audit to identify any gender pay gaps.

The periods for which bonuses are caught is from the start of May this year. Decisions made now will impact upon the pay gaps identified, particularly for bonuses. If you want to address any gaps identified, time is running out. If you want to be able to explain that you have taken steps to close the gaps identified, you need to be considering such steps now, well ahead of the date for reporting.

We have specialists who can help your organisation comply with the requirements of gender pay reporting to:

  • Identify the gender pay gaps across your organisation and test these against potential objective justifications;
  • Prepare a comprehensive report providing insight and analysis on the data, potential justifications and identifying any high risk areas;
  • Work with you to prepare a bespoke action plan to address and remedy any issues and minimise risks before the new changes come into effect.

Jawaid Rehman (jawaid.rehman@weightmans.com) is a Partner in the Birmingham Employment, Pensions and Immigration Team who specialises in defending equal pay litigation. If you would like more information, then please do not hesitate to speak to your usual contact in the Weightmans employment, pensions and immigration team or Jawaid.