Gender Pay Gap Reporting

Following the recent DPG Community poll where 67% of respondents said they were not ready for Gender Pay Gap reporting, I wanted to follow this up with some more information on what this is and what it means.

The gender pay gap has attracted a lot of publicity in the media over the course of the last number of months. Since the introduction of the Equality Act 2010, the government has had the power to impose mandatory pay reporting on employers. Until now, the government has tried to encourage large organisations to publish gender pay information on a voluntary basis. This has been met with a lukewarm response by employers.

From next month (April 2017), mandatory gender pay reporting regulations will come into effect for larger employers. Time will tell whether this new legislation has the desired effect of reducing the current gender pay gap (which sits at around 18%).

What can employers expect from these regulations?

Employers with 250 or more employees are required to publish their gender pay data. Broadly, employers will have to divide their pay data into quartiles, setting out the percentage of male and female employees within each quartile. Bonus data must also be made available. Pay will be measured based on employees’ earnings on the snapshot date, being 05th April for businesses and charities and 31st March for public sector organisations.

Gender pay reporting will apply to those employees or workers who are employed under a contract with the employer. This will extend to casual workers, contractors and apprentices. Agency workers will generally be taken to be employed by the agency rather their host employer.

For the purposes of the calculations, pay will be taken to include basic pay as well as shift premiums, allowances and pay for leave.  Overtime is excluded as well as those employees who are in receipt of less than full pay (i.e. employees on family or sick leave).

ACAS has published some advice and guidance (found here) for employers in relation to mandatory gender pay reporting. In particular, the advice suggests that employers may wish to put in place action plans in order to reduce their gender pay gap. This could include supporting proposals such as flexible working.

Failure to Comply

So far the government has outlined its intention to ‘name and shame’ those employers who fail to comply with the gender pay regulations. The hope here is that the adverse publicity that comes with this will result in businesses taking positive action in order to reduce its gender pay gap.  Higher levels of transparency and the fact that data is readily available may impact on whether a prospective employee, customer or supplier decides to engage with an organisation that has a substantial gender pay gap. This in itself could act as a trigger for employers to tackle any disparities that do exist. 

The government has declined to put in place a system of civil fines under the regulations. It is likely that it will review overall compliance levels over the next few years before putting any sanctions in place. This stops short of measures that have been taken by other European countries, such as requiring employers to put in place action plans to reduce or eradicate their gender pay gap.

Have you any questions on the Gender Pay Gap Reporting?

What is happening in your organisation around this?

I’d be keen to hear any thoughts or experience on the subject.

David Hession is an Employment Solicitor for Simpson Millar LLP.  

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