Mandatory gender pay gap reporting obligations are expected to become law in April 2017. We are still waiting for the final version of the relevant regulations, but it is anticipated these will be put before Parliament this autumn with a commencement date of April 2017.
Gender pay gap reporting sounds a frightening prospect and a number of questions spring to mind. Who has to make a report? What information has to be reported? Where and when must the information be reported? What happens if I don’t report? What can I do to get ready? Bryan Cave can help you “mind the gap”!
Who has to report gender pay gap information?
First you need to clarify whether you will fall under the mandatory gender pay gap reporting obligations. You only have to make a gender pay gap report if you are an employer with 250 or more employees in Great Britain on the date a snapshot of pay data for the preceding pay period is taken. The first anticipated “snapshot” date is 30 April 2017.
Are casual workers i.e. workers under zero hours contracts or umbrella contracts to be counted? We are still waiting for clarification of the exact definition of “employee” within the final version of the regulations but it is believed these types of employee will fall within scope.
What information has to be reported?
If you are required to make a gender pay gap report, the information you will be required to publish is:
- Overall gender pay gap percentages using both the mean and median average gross hourly pay.
- The numbers of men and women in each of four quartile pay bands, based on the employer’s pay range.
- The proportion of male and female employees who received bonus pay within the preceding 12 months.
- The gender pay gap percentage showing the difference between male and female bonus pay during the preceding 12 months.
The percentage pay difference between male and female employees is calculated as follows where A = average pay of all male employees and B= average pay of all female employees.
(A-B)/A x 100 = gender pay gap percentage
Pay is defined non-exhaustively in the draft regulations as basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other pay (including car allowances paid through the payroll, on call and standby allowances, clothing, first aider or fire warden allowances.) It does not include pay from a different pay period, overtime pay, redundancy pay, benefits in kind, expenses, value of salary sacrifice schemes, arrears of pay and tax credits.
If you wish, you will also be able to publish a narrative to accompany the gender pay gap figures so that you may explain any pay gaps and set out the action which you intend to take to remedy them.
Any gender pay gap report must also be accompanied by a written statement of accuracy which is signed by a senior individual i.e. a company director, a partner, a designated member.
When must the information be reported and where?
A snapshot of pay data will be taken annually at a specific date. You will then have up to a year from that date in which to prepare and publish your gender pay gap information. It is anticipated the first “snapshot” date will be April 2017, meaning the first gender pay gap reports will be required by April 2018.
Employers must publish their gender pay gap report on their own website and keep the information online and available for three years. The report also has to be uploaded to a government website.
What happens if you do not report your gender pay gap?
There is no enforcement mechanism contained in the draft regulations. There are also no civil or criminal sanctions for a failure to publish gender pay information or for publishing misleading or inaccurate data.
However, consider the potential adverse publicity and reputational harm. The government has indicated that it will monitor non-compliance and may name and shame non-compliant employers.
What should you be doing to get ready?
- Identify whether you are likely to fall under the gender pay gap reporting obligations, which will involve considering whether you will have 250 or more relevant employees when the snapshot of pay data is taken.
- Appoint a director, partner or relevant senior employee to oversee and co-ordinate the collection of data and preparation of the report. They have to be prepared to sign off the report.
- Consider whether you have a system in place which means you can easily gather and analyse pay data. If not, start preparing a system now.
- Consider how you will address any gender pay concerns both internally and externally after the publication of your gender pay gap report? How can senior management and human resources reassure employees? You might also want to consider the appointment of public relations officers and marketing to handle external communications / website publications.