If you have not done so already, you should start thinking about the new requirement to report gender pay gap information. This is being brought in by the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016.
Who needs to report gender pay gap information?
Employers with 250 or more employees on 30 April 2017 will need to report gender pay gap information. An Employee means someone who ordinarily works in Great Britain and whose contract is governed by UK legislation. It is likely that the definition of employee will be further clarified in the final regulations (see below). This will affect employers employing around a third of the UK workforce.
When will this come into force?
The Regulations come into force on 1 October 2016.
Are the Regulations in final form?
No - They have undergone a final consultation which closed on 11 March 2016. The results of which are expected over the summer.
Will there by any guidance published to help employers?
Supporting guidance to help employers implement the Regulations will be published later this year.
What will employers need to do?
Employers must publish:
- The difference between male and female employees’ mean gross hourly pay, expressed as a percentage of male employees’ mean gross hourly pay
- The difference between male and female employees’ median gross hourly pay, expressed as a percentage of male employees’ gross hourly pay
- The difference in male and female employees’ mean bonus pay
- The proportion of male and female employees who receive bonus pay during the preceding 12 months
- The number of male and female employees in each four salary quartiles. Employers will calculate their own quartiles based on their overall pay range.
This information must be published on their website and retained online for three years. They must also upload the information to a government sponsored website. A written statement confirming that the information is accurate must accompany the required information. This must be signed by a director (for companies), a designated member (for LLPs), a partner (for partnerships) or the most senior employee of the employer.
A preliminary snapshot will need to be compiled for April 30th 2017. The detailed pay gap information must then be calculated and published on a date of the employer’s choosing, but by April 2018 at the latest. The obligation will apply on an annual basis thereafter.
Why is this being done?
The Government believes that the publication of these figures will increase employee confidence in the remuneration process and help employers identify the opportunities to increase female participation rates.
The Government believes this process will drive employers to tackle workplace inequality.
What are the penalties to ensure compliance with the new regulations?
The main consequence of non-compliance for employers seems to be the potential risk of being “named and shamed”, although this is not contained in the regulations themselves. The government is also proposing to:-
- Run periodic checks to assess for non-compliance
- Produce tables by sector of employers’ reported gender pay gaps
- Highlight and identify employers publishing particularly full and explanatory information.
What to do next?
It is a good idea to start collating the information required now to see what kind of picture it gives before an organisation is required to produce a report by the regulations. Presenting the information in a certain light is critical to ensure it does not give the wrong impression affecting the organisation’s reputation and ability to attract top calibre employees. Employers will have the option to include a narrative explaining any pay gaps and setting out what action it plans to take.