The Government has launched a consultation into the proposed gender pay gap regulations. This is a follow up to the earlier consultation on how to increase pay transparency, and focuses specifically on draft regulations which will apply to private and voluntary sector employers with at least 250 employees.
When do employers need to act?
It is proposed that the regulations will come into force on 1 October 2016, although the draft regulations specify that the information must be published within a year from 30 April 2017 i.e. as late as 29 April 2018.
What must be published?
The main requirement is to publish the overall mean and median gender pay gaps. The Government believes both these figures are useful – the mean because women are often overrepresented at the low earning extreme and men overrepresented at the high earning extreme and the median because this is the best representation of the ‘typical’ difference as it is unaffected by a small number of very high earners. The pay gap will be disclosed as a percentage difference, so no salary indications will be in the public domain.
The calculation will be based on the hourly pay rate for each employee and will be assessed each April, starting in 2017. The hourly rate of pay will include all basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other pay (including car allowances paid through the payroll, on call and standby allowances, clothing, first aider or fire warden allowances). The pay information will be averaged over the employer’s usual pay period; so if the employer pays monthly, hourly pay is assessed and averaged over a full payroll month.
The draft regulations also require employers to publish the difference between mean bonus payments made to men and women over a 12 month period, and also the proportion of men to women who are awarded any bonus, again both as percentages.
Employers will be required to report on the numbers of men and women in each quartile of their pay distribution.
The information must be published on the employer’s website and retained for 3 years. It must also be uploaded to a government sponsored website.
Further analysis needed?
There is no proposal to break down the figures by full or part time workers, and having an overall figure for the workforce may disguise issues within parts of the business or across roles or job grades. If the regulations are enacted as proposed, it would be helpful for an employer to analyse any differences to a degree beyond that required by the regulations, as if the source of any discrepancy cannot be identified it will be hard to remedy.
The draft regulations are open for consultation until 11 March 2016 and feedback can be provided via this link