The recent news headlines have been inundated with reports of gender pay gaps within well-known, and often well-respected, organisations.
One of the latest being Channel 4, which has recently reported an average gender pay gap of almost 29% and a bonus gap of almost 48%. But does this mean that those organisations are in breach of equal pay legislation? Not necessarily…
The laws relating to ‘gender pay gap reporting’ and ‘equal pay’ are entirely separate and distinct, and can be summarised as follows:
Gender pay gap reporting
The gender pay gap reporting regulations came into force on 6 April 2017, and require large private and voluntary sector employers to publish an annual gender pay gap report. Each affected employing entity (being, any private or voluntary sector employer with 250 or more employees on 5 April that year (the “snapshot date”)) must publish the following information:
- Mean and median hourly pay of males and females;
- Proportion of males and females within each pay quartile;
- Mean and median bonus pay of males and females over the 12 month period preceding the snapshot date;
- Proportion of males and females who received a bonus in that 12 month period; and
- Written statement confirming the accuracy of the gender pay gap report.
The employer may also choose to publish an accompanying narrative, to provide some additional context to the pay data.
The pay data listed above must published on the employer’s own website (for a period of at least three years) and on the government website.
Although there are currently no penalties or sanctions contained within the regulations for non-compliance, the Equality and Human Rights Commission (“EHRC”) has recently warned employers that it will start enforcement action against those who fail to publish their gender pay gap information before the deadline which was 4 April. The EHRC have stated that this may ultimately lead to employers facing a potentially unlimited fine decided by the courts.
The law on equal pay requires employers to ensure males and females receive equal pay for equal work. This means that males and females who are engaged in the same employment (being, like work; work rated as equivalent; or work of equal value) are entitled to receive the same pay, as well as equivalent contractual terms more generally.
However, the employer will not be acting in breach of equal pay legislation if it can show that the difference in pay (and other contractual terms, if relevant) is due to a material factor which is neither directly, nor indirectly, based on sex. This could include, for example, seniority or length of service, skills shortages, different hours of work and geographical reasons.
Failure to comply with equal pay legislation may result in the individual bringing a claim against their employer in the civil courts or Tribunals. Potential remedies for a successful claim include a declaration of the individual’s rights by the court or Tribunal, payment of any arrears and/or damages.
So, how are they different?
In a nutshell, one of the key differences between gender pay gap reporting and the law on equal pay is that the former focuses on a high-level overview of pay between males and females within an organisation, whilst the latter more specifically compares the employment terms and roles carried out by particular individuals.
This means that a gender pay gap does not in itself provide employees with an infallible equal pay claim. However, it could suggest to the workforce (and the public more generally) that the organisation tends to treat females less favourably than males (or vice versa). This may incite employees to analyse their employment terms in greater detail with their peers to explore whether or not they may be entitled to bring a claim.