Under draft Regulations due to come into force on 1 October 2016, employers with at least 250 employees in the UK will be required publish an annual gender pay report. Employers must take a ‘snapshot’ of gender pay data within their organisation for 30 April 2017 and must publish their first gender pay report on their website by 30 April 2018.

What information must be calculated and published?

  • Gender pay gap information showing the overall mean (i.e. the average) and median (i.e. the wage of the ‘middle earner’ – e.g. the amount of the 50th pay package if 100 employees’ pay packages within an organisation are listed in increasing size). ‘Pay’ includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, on-call and stand-by allowances, bonus pay, car allowances paid through payroll, clothing, first aider or fire warden allowances. It does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay or tax credits.
  • The difference between mean bonus payments paid to men and women.
  • The proportion of male and female employees that received a bonus.
  • The number of men and women in each salary quartile (based on the overall pay range).

The draft Regulations focus on the number of employees for a single employer – for example, if there is more than one employing company in a group, that group only has to report on any individual companies which have more than 250 employees.

Where must the information be published?

  • On the employer’s public website where it must be maintained for 3 years.
  • Employers must also upload the information to a Government-sponsored website.

The information must be accompanied by a written statement signed by a director (or equivalent) confirming the information is accurate.

What are the key dates?

  • The Regulations are due to come into force on 1 October 2016.
  • The first annual ‘snapshot’ of April pay data required for the report must be taken by 30 April 2017.
  • The first gender pay report must be published online by 30 April 2018.
  • Gender pay reports must be published annually thereafter using pay data from the previous April.

How will it be enforced?

  • Whilst there will be no civil penalties for non-compliance, the Government will create a database of complying employers and has stated that it intends to closely monitor levels of compliance over the next few years. It has indicated that it will consider:
    • Producing tables by sector showing employers’ reported pay gaps.
    • Highlighting employers who publish helpful explanatory information with their pay report.
    • Naming and shaming non-compliant employers.

What do employers need to do next?

Employers will need to put in place an action plan to prepare for the Regulations coming into force in October. This might include:

  • Carrying out a voluntary pay and bonus audit and pay quartile analysis to identify any potential pay gaps.
  • Considering the reasons behind any pay gaps (e.g. staff transferring into the company on protected terms) and taking advice on whether these reasons might provide a defence to any future equal pay.
  • Considering the extent to which the organisation will provide further information to explain its pay gap. Employers can provide as much additional information as they wish to explain any apparent pay gaps. However, they will need to be careful because any explanation could be subject to scrutiny if the employer does not also state what measures they are taking to address any gap in pay.
  • Ensuring that the organisation has a clear strategy and buy-in from the board and senior managers in relation to achieving gender pay equality. This should include working towards gender balance at board level in line with the recommendations of the recent Davies Report.

Don’t score an own goal

It is essential that any auditing or pay analysis is conducted via your legal advisers so that it benefits from legal professional privilege where possible. Without this protection, the audit itself and all associated internal documents and analysis would potentially be disclosable in any legal proceedings such as an equal pay or discrimination claim and could be used against employers.

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