The Government has now published its response to its consultation on mandatory gender pay gap reporting, confirming that private or voluntary sector employers with 250 or more employees (ordinarily working in Great Britain with a contract governed by UK law) will be required to publish annual information relating to their gender pay gaps on their UK website. At the same time, the Government has published for consultation (closing on 11 March 2016) a set of draft regulations. It is intended that the regulations will come into force on 1 October 2016 and require employers to take a preliminary data snapshot in April 2017, followed by publication of a full report by no later than April 2018.
The key points of which employers need to be aware are as follows:
- Employers will be required to publish an overall gender pay gap figure, calculated using both the media and mean figures. The Government suggests that:
- The median is the best representation of the ‘typical’ difference as it is unaffected by the small number of very high earners;
- The mean will take into account the full earnings distribution and will be useful because women are often over-represented at the low earning extreme and men over-represented at the high earning extreme.
- “Pay” is proposed to include basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and certain allowances. “Pay” will not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits.
- Employers will be required to separately analyse all bonus payments made in a 12 month period and publish the difference between women and men.
- Employers will be required to report on the number of men and women working across salary quartiles. The salary quartiles will be calculated by employers themselves based on their overall pay range.
- Narrative reporting to provide context to, and explain, an employer’s gender pay gap information, and to set out what actions will be taken, will be voluntary but strongly encouraged.
- Employers will be required to take a data snapshot on 30 April each year and must then publish their gender pay gap information at any time within 12 months of that date.
- The gender pay information must be published in English on a searchable UK website that is accessible to both employees and the public. The information must include the signature of a director (for companies) confirming its accuracy, and the information must be linked to a Government-sponsored website which will serve as notification to the Government that the information has been published. The information must be retained online for 3 years.
- At this stage, there will be no civil or criminal penalties for failure to comply with the obligation to publish gender pay gap information. Instead, the Government is relying on an expectation that employers will comply, backed up by the potential for it to publicise the identity of employers who have not complied. This position will be kept under review during the first few years of implementation.
- Ahead of commencement of the reporting obligations, the Government will be preparing a package of guidance and support for employers to ensure they are familiar with what is required.
- The Government plans to produce publically displayed tables by sector of employers’ reported pay gaps. It will also aim to identify and highlight employers publishing particularly full and explanatory information.
- The Government will review the gender pay reporting obligations within 5 years, setting out its conclusions in a published report.