Summary: The long-awaited employers’ guidance for complying with the Gender Pay Gap Reporting Regulations has now been published. Here are five key things to take away.

The new draft ACAS guidance, published in association with the Government Equalities Office, gives helpful suggestions for dealing with some difficult gender pay gap reporting issues, but leaves other issues unresolved.

1. A five step roadmap

The guidance sets out five detailed steps for employers to follow:

  1. Extract the essential information (identifying which staff are in scope, what ordinary pay and bonus pay they have received in the snapshot pay period, what their working hours are etc.)
  2. Do the calculations (the relevant pay and bonus gap figures, the proportion of men and women receiving bonuses and the proportion of men and women in each salary quartile)
  3. Make the required supporting statement and consider supporting narrative
  4. Publish your gender pay information
  5. Implement plans to manage your gender pay gap issues (this step is good practice rather than a strict legal requirement)

The guidance includes some helpful suggested actions to identify pay gap causes and also suggests steps employers can take to mainstream workplace practices to deal with the underlying causes. These include, for example, ongoing monitoring of workforce demographics, managing family friendly leave, and flexible working arrangements to encourage greater female workplace participation at all levels.

2. Who is in scope - difficult classes of staff

Contractors and overseas staff

There are useful suggestions to help employers decide whether to include contractors and overseas staff in the analysis. However, the suggested case-by-case analysis may well be impractical for employers with large populations of these types of atypical workers.

Zero hours workers

There is no guidance on whether, for the purposes of the mean and median pay gap calculations and the pay quartile calculation, employers can ignore zero hours workers who earn no pay during the snapshot period. Including them in your analysis can materially skew the gender pay gap figures. Employers may wish to consider how they deal with this in the narrative to their Report or whether they take the view that such workers can be ignored.

3. What counts as pay

Ignore employer pensions contributions

It was unclear whether employers’ pension contributions had to be included as part of employees’ pay. The guidance says that these should be excluded.

Backdated pay rises

The guidance indicates that pay rises made after the snapshot pay period, but intended to cover the snapshot pay period, should be excluded.

Bonuses

The guidance suggests that deferred cash bonuses should be treated as paid when they are actually received. This is so even if the bonus is attributable to a different (typically earlier) period. Although a simple rule, this may well cause difficulties for employers in particular sectors such as financial services, where staff may have multiple deferred bonus awards running over a period of years.

4. When to publish your Report – publish quickly?

The guidance encourages employers to consider publishing their Gender Pay Gap Report as soon as is reasonably possible. However, this timing decision will depend on each employer’s own circumstances. Many employers may wish to take a more measured approach to publishing within the one year time frame, so that they are confident they have properly considered the impact of their pay gap analysis and have taken any remedial steps they consider appropriate. Delaying may also enable employers to consider the approach other employers in the same industry have taken with their supporting statements.

5. Managing your risks

The draft guidance repeatedly highlights the reputational risks associated with gender pay gap reporting. Employers will also want to bear in mind other types of risk, not least potential litigation risks arising from pay discrimination claims and wider employee relations issues.

With the first snapshot date fast approaching, employers need to prepare for the gender pay gap reporting regime in earnest. Complying now ensures you are best placed to manage and explain your pay gaps.