Commercial and financial sector organisations with 250 or more employees do not have long before their numbers for gender pay reporting are set in stone on 5 April 2017.
It is therefore a welcome development that ACAS have decided to publish a draft of their non statutory guidance before the regulatoins have been approved by Parliament. In particular the ACAS guidance assists with understanding:
- What the gender pay gap is and the factors that contribute to it.
- Which employees based overseas will count for determining the 250 threshold size: they count if they can bring a claim in an employment tribunal under the Equality Act 2010 (which can sometimes be difficult to establish as the law in this area is complex).
- Gender identity issues: employees who do not identify as either gender can be omitted from the calculations.
- How to distribute male and female employees who are paid the same hourly rate across pay quartiles.
- How salary sacrifice schemes play into the definition of pay: employers should use an employee's gross pay after any reduction for salary sacrifice has been made.That pay gap calcuations will not need to be re-run for backdated payments.
- That if an employee is on a standard hourly rate of pay, which does not differ for example due to bank holidays or week-ends, it is uneccesarly to carry out calcualtions to establish their rate of pay.
The ACAS guidance also sets out five main steps to help organisations in scope project manage gender pay and bonus reporting. These are:
Step 1: Extract the essential information including working out which employees count as relevant employees for the bonus gap calaculations and which are full pay relevant employees for pay gap and quartile purposes Step 2: Carrying out the calculations according to the formulas in the regulations Step 3: Make a supporting statement confirming the information is accurate Step 4: Publish the information Step 5: Implement plans to manage to gender pay gap
The first four steps are legal requirements, but the last is not.
What does this mean for employers?
Employers who have not started on their gender pay reporting journey do not have long to ensure they have access to all the payroll data needed to analyse their gender pay gap on the snapshot date of 5 April 2017. A project team involving payroll and HR needs to be established if one does not already exist. Those gathering this data will need to be briefed on what elements of pay need to be included in the analysis. For instance shift premium pay should be included, but overtime payments should not.
While, as noted above, there is no obligation to provide a voluntary accompanying narrative to the figures, many employers will wish to do this. Ensuring good internal and external communication about the difference between unequal pay for men and women (which is unlawful), and the gender pay gap (which is not unlawful as it is simply the average difference between men and women's earnings) will be a crucial part of these communications, as will giving any explanations for why the gap exists.
DAC Beachcroft has been at the forefront of advising on, and litigating these matters over the past decade. We advised our financial services clients back in 2009 when the EHRC made enquiries about sex discrimination and the gender pay gap in their sector. We have successfully defended thousands of equal pay claims for our NHS clients, shaping that national litigation through the test cases we have run. We have worked with the GEO to shape these reporting regulations.
We can assist with:
- Helping you understand what you need to include in the calculations.
- Examining the causes of your gender pay gap and advising on steps to put this right.
- Working up internal and external communications surrounding your figures to reduce reputational damage both inside and outside of your organisation.We can do all this under legal privilege to ensure that any initial drafts of communications or misleading data does not need to be published.