Today, the UK mandatory gender pay reporting regime will come into force under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the “Regulations”). The UK has had a voluntary gender pay gap reporting regime since 2015, but this has largely been viewed as unsuccessful, with only around seven employers publishing data about their gender pay gap. Under the mandatory regime, large employers will need to publish (on their website and a designated UK government website) annual reports containing detailed data on their gender pay gap. The data must be kept available on the website for at least three years.
Affected employers must act now in order to capture data for relevant employees as at April 5, 2017, for the first report, which must be made public by April 4, 2018. Although the final draft of the Regulations was only recently published, many large employers have been preparing for the regime for many months.
Who is affected?
The Regulations apply to employers with 250 or more employees who work in or have a sufficiently close connection with the UK. Employees who are on secondment outside the UK could count towards the threshold, as could employees on international assignment to the UK. Other categories of employees based outside the UK but with a connection to the jurisdiction (e.g., a home in the UK) could also count; the UK law in this area is complex, and, if in doubt, employers should seek legal advice. Other types of “worker,” such as contractors, LLP members and non-executive directors, could also count.
The 250 threshold applies per employing entity, rather than on a consolidated, group‑wide basis. Therefore, if you have separate employing entities, each with fewer than 250 employees, the reporting requirement does not apply.
What information must be published – a reminder
Information as at a “snapshot” date of April 5, 2017, needs to be collated in order to publish the following categories of information for relevant employees:
- mean and median gender pay gap;
- mean and median bonus gender pay gap (by reference to bonuses paid in respect of the previous 12 months);
- proportion of males receiving a bonus payment;
- proportion of females receiving a bonus payment; and
- proportion of males and females in each quartile pay band.
The elements of “pay” to be included and how hourly rates of pay are to be calculated are complex. HR, payroll and legal advice should be sought as necessary. Employers are encouraged to provide a narrative explaining any gender pay gap identified and actions taken to try to close the gap. A written statement must be included in the report to confirm the accuracy of the calculations and be authorized by a senior manager.
Sanctions for failure to comply
It is unlawful for employers who are subject to the regime not to comply. However, no specific sanctions are imposed by the Regulations. There is a reputational risk for organizations who do not publish data, and adverse inferences may be drawn in discrimination or equal pay claims, or indeed by job applicants. It is possible that the UK government might amend the Regulations in the future to impose sanctions (e.g. if a number of employers fail to report).
Employers, employees and job applicants await the first reports, which will be published this time next year, if not before. It is fair to assume that Claimant law firms might also take a keen interest in the reports, with a view to scoping out potential equal pay claims where a large gap is reported.
The UK government has not at this stage announced any plans to extend the Regulations to mid-sized employers, but the Regulations will be reviewed over the next five years, so smaller employers should watch this space.
Official guidance on the Regulations is available here.