The Government have today published draft regulations governing the compulsory reporting of gender pay gaps by employers with more than 250 employees (meaning those who ordinarily work for an employer in Great Britain and whose contracts are governed by UK legislation).
A Government Consultation was put out in July 2015 following which there has been much speculation about the type of reporting that which will be required. The draft regulations are detailed and cover a range of matters which will need to be published by employers in a prescribed manner with reference to each 12 month period starting with the period ending with 30 April 2017.
Notably they include far-reaching obligations to provide information relating to bonuses and other forms of long term incentive remuneration. These are subject to further consultation, but the salient points are:-
What will need to be published?
The difference, in relation to the relevant pay period in both mean (average) pay and median pay.
Pay for this purpose will include basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other items such as car allowances and is the figure before deductions for PAYE or pension contributions. Weekly pay is then divided by the weekly basic paid hours for each employee to arrive at the 'gross hourly rate of pay'. The difference in mean pay is the gross average hourly rate of pay of male relevant employees employed on the April date compared to that of such female relevant employees on a percentage basis.
The difference in median pay is calculated by taking the difference between the median male and female gross hourly rates on a percentage basis.
The difference in mean bonus pay between male and female employees and the proportion of male and female relevant employees who received bonus pay.
Bonus for this purpose includes payments received and earned in relation to profit sharing, productivity, performance and other bonus or incentive pay, piecework and commission as well as long term incentive plans or schemes (including those dependent on company and personal performance) and the 'cash equivalent value of shares on the date of payment'.
The difference in the mean (average) bonus pay of all male and female employees during the 12 month period must also be published on a percentage basis. In addition, it will be obligatory to express the proportion of male and female relevant employees who received bonus pay during the 12 month period, as a percentage of all male and female employee respectively.
It will be obligatory to identify the numbers of male and female employees in each of four pay bands.
The employer must identify quartiles for the overall pay range based on the gross hourly rate of pay for each relevant male or female employee listed in order of increasing value, and publish the numbers of male and female employee who fall into each pay band.
Form and manner of publication
The information will need to be certified as accurate and it must be published on the employer's website in the UK for at least 3 years. It must then be uploaded to a government-sponsored website. Although not in the draft regulations, there has been discussion about the possibility of the government publishing a form of 'league table'.
The draft regulations are intended to come into force on 1 October 2016, and the first period over which the calculation must be made will be the 12 months ending 30 April 2017. Publication must take place annual within 12 months of 30 April of every year.
The draft regulations are perhaps more rigorous than was anticipated in terms of the different types of information to be published and the certification requirements. The fact that they are so detailed, and must be calculated as at the same date for all employers (April has been explained as being a date when seasonal fluctuations are more limited) will arguably give a more representative picture. The fact that the figures have to be certified was not anticipated, and may raise concerns for employers although the draft regulations do not include any penalties for non-compliance.
The inclusion of the requirement to publish bonus information as a separate measure and to include bonus in the gross hourly pay figure is potentially significant.