The government is consulting on draft regulations on gender pay reporting for large organisations.
Employers need to start preparing for radical, mandatory requirements to disclose information about the differences between male and female pay in their workplace
Since our previous article (Gender Pay Reporting: Why does it matter?) draft regulations have been published which provide the finer details of the new legal obligations on gender pay reporting. It is now clear that this will place a significant burden on data gathering, analysis and disclosure on organisations.
This article summarises the important provisions of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the 'Regulations') that are expected to come into force on 1 October 2016.
Who does the legislation apply to?
The Regulations will apply to private and voluntary sector employers in England, Wales and Scotland with at least 250 employees. Employers will have approximately 18 months from the expected commencement of the Regulations before they are required to publish their first gender pay report i.e. by April 2018. Thereafter they will have to report annually.
What information do employers need to publish?
Employers will be required to publish two overall figures: the mean gender pay gap and median gender pay gap. We strongly advise employers also publish additional narrative information to explain any pay gaps and what action will be taken. However, this will not be mandatory.
The gender pay information will need to be published in English on a searchable UK website, accessible to the public. Information must be retained online for three years. The information will also need to be uploaded to a government-sponsored website.
Calculating gender pay gaps
Employers will be required to calculate gender pay gaps using data from a specific pay period every April starting in 2017. Pay is defined to include bonus, allowances and shift pay premiums but excludes overtime, benefits in kind and expenses. To generate average earnings figures unaffected by the number of hours worked, employers will need to calculate an hourly pay rate of pay for each employee.
Employers will also be required to publish the mean difference between bonus payments to men and women as well as the proportion of male and female employees that received a bonus. In addition, employers will be required to report on the number of men and women in each quartile of their own pay range. A senior person will be required to sign to confirm the information provided is accurate.
No new civil penalty will be introduced for breach of the Regulations but the government will keep this under review and has also indicated it may publicise the identity of employers who have not complied.
The consultation period on the Regulations closes on 11 March 2016. Look out for our next articles in the series which will look at how to present gender pay gap information and how to develop a strategy for closing your gender pay gap.