The Government has today published its draft regulations providing for mandatory gender pay reporting, for consultation until 11 March 2016.  The key points are as follows:

  • The obligation will apply to employers with at least 250 "relevant employees" (ie, employees who ordinarily work in Great Britain and whose contract is governed by UK legislation);  the proposal to phase the obligation in for those with 250-500 employees has not been adopted.  
  • Employers will be required to take a data snapshot on 30 April each year and will then have 12 months within which to publish their data on a date that suits them.  The plan is to bring in the regulations in October 2016, with the first snapshot to be taken on 30 April 2017 and data published by April 2018.  
  • The data will need to be signed off as accurate by a director or equivalent and will have to be published on the employer's UK website and retained there for at least 3 years.   Employers will also have to send evidence of compliance to a government-sponsored website, and the government has stated that it intends to use this to produce publically displayed tables by sector of employers' reported pay gaps.  It may also publicise the identity of employers known not to have complied.  No additional civil penalties for non-compliance are proposed at the moment, although this will be kept under review.  
  • There is no requirement to provide separate data for full and part-time employees or by grade or job type.  The data required is:
    • the difference in mean and median pay between males and females;  overtime pay, value of salary sacrifice schemes and benefits in kind are not included within the definition of 'pay';
    • the number of men and women working across salary quartiles; 
    • the difference in mean bonus pay during the previous 12 months;  bonus is defined broadly to include incentive pay, piecework, commission, LTIPs and cash equivalent of shares;
    • the proportion of males and females who received bonus pay. 
  • Supporting guidance (to be published this year) will "strongly encourage"– but not require – employers to contextualise their data with a narrative.  There will be no constraints on the form this narrative should take.  It is suggested that it might include detail of the initiatives employers have implemented to recruit more women or strengthen their female talent pipeline, to mitigate the risk of reputational damage from publication of a significant pay gap.   
  • The supporting guidance will also set out how to account for different governance structures such as subsidiaries and parent companies.

Employers will need to take action now to prepare for this change, to ensure they will have processes in place in time to capture the required data efficiently and to consider what steps they should be taking to address any pay disparity (and how these should be presented in any narrative).

Employers should also be aware that pay information may be used as ammunition for equal pay claims.  Until now, these claims have been restricted largely to the public sector where pay information is often more readily available.  This may have led private sector employers to believe they have no real exposure.  However, everything could be about to change and private sector employers may find they have very significant liabilities for which they have not made adequate provision.