Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, all private and voluntary sector organisations with 250 or more employees must analyse their gender pay gap as at 5 April each year starting in 2017. This means that in-scope employers must publish their first gender pay gap report no later than 4 April 2018. Thereafter, they must produce and publish an annual report.
As of January 2018, with less than three months left to comply with the Regulations, only 530 employers have published their gender pay gaps. This means that the vast majority of organisations with 250 or more employees (approximately 9,000 companies) have yet to comply. While many of these employers are likely to be in the process of preparing the statistics, anecdotal evidence suggests that a significant number have not yet started, and some do not intend to comply at all.
As to those falling into the latter group, some may have been influenced by the fact that the Regulations do not appear to contain any effective enforcement provisions or sanctions for non-compliance. However, there are two issues with this approach:
First, it overlooks the potential benefits of compliance: gender pay gap reporting will communicate to existing staff that your organisation is committed to building a diverse and inclusive workplace, that gives equal opportunities to all employees irrespective of gender. It also will enable you to monitor pay, bonus and career progression among staff to ensure that all employees, regardless of gender, are supported to reach their full potential. In turn, a more valued workforce is likely to demonstrate greater productivity and reduce costs associated with high staff turnover.
Secondly, the view that the Regulations do not provide for effective enforcement is likely to prove misguided. Under a consultation paper published before Christmas, the Equality and Human Rights Commission (EHRC) laid out its proposed enforcement strategy for dealing with non-compliance. The EHRC’s view is clear: “Over 40 years since the ban on sex discrimination in pay, it is shameful that women continue to be held back. But change is on the horizon and it’s about time. The law now says employers must be transparent about pay for women, and our regulatory role is to make sure this happens.” Its proposed enforcement strategy is stark: businesses that fail to publish any or accurate data on the gender pay gap at their organisation face potentially unlimited fines as well as criminal convictions.
What are the rules
Organisations are only subject to the Regulations if they have 250 or more employees on the snapshot date of 5 April. In many cases, it will be obvious whether or not you are in scope. However, for employers at or near the threshold on the snapshot date, it may not be straightforward, particularly for organisations who use casual staff according to demand or ‘zero-hour’ type arrangements. Also, organisations should note that a wider definition of who counts as an employee is used for the Regulations: workers are included, as well as some self-employed people.
If you are caught by the Regulations, you must calculate the following information at the snapshot date of 5 April:
- Mean and median gender pay gap
- Mean and median bonus gender pay gap
- The proportion of males and females receiving a bonus payment
- The proportion of males and females in each quartile pay band
The information must be published on your website and on a designated government portal, together with a written statement, authorised by a senior person, which confirms the accuracy of the calculations.
Larger employers may find it useful to break their calculations down further. Examples may include where they are operating in a number of completely different employment sectors, or where the jobs and levels of pay and bonuses are not obviously comparable. Similarly, a group of employers who have all provided separate reports may wish to give an indication of the gender pay gap within their overall group.
Provided that the legally required calculations are clearly provided, employers can also enhance their reports as they wish on a voluntary basis where they consider this informative and appropriate.
It is expected that most organisations are likely to have a gender pay gap. However, this does not necessarily mean they have acted inappropriately or discriminatorily, and the gender pay gap should not be confused with equal pay. All employers should therefore consider including a narrative in its report to help anyone reading the statement to understand the organisation’s view of why a gender pay gap is present and what the organisation intends to do to close it.
What to do next & how can BrookStreet des Roches help?
If your organisation is in-scope but has not yet started to collect its data, it is important that you start taking appropriate steps to collate and analyse that data as soon as possible.
This will give you sufficient time not only to ensure that your gender pay gap report and the underlying data is accurate but also to:
- Consider the potential contents of any narrative which will accompany the gender pay gap information and whether any additional, more comprehensive, data will be produced, going beyond the basic requirements of the Regulations.
- Consider whether to produce an action plan setting out the steps that the employer proposes to take to narrow the gender pay gap, and consider what steps would be feasible.
- Ensure that any policies or procedures that may be affected by proposed actions are updated in time for the publication of the action plan.
- Identify a member of senior management who will be responsible for implementing any action plan, for example, by setting internal targets for diversity in its senior management and higher quartile pay bands, and monitoring long-term compliance with the plan.