The Government has finally published its draft The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 , which will make gender pay gap reporting mandatory for employers with at least 250 employees in Great Britain. The draft Regulations will be consulted on until 11 March 2016, but they are not expected to change.
What will have to be reported?
- The difference in mean and median pay between male and female employees, which should be calculated over the relevant pay period (e.g. if paid monthly, pay should calculated on a monthly basis), which should include 30 April each year:
- The mean pay gap should be calculated as the difference between the average hourly pay rate for men and women. The median pay gap should be calculated as the difference between the median hourly pay rate for men and women.
- The hourly pay rate should include basic salary, bonuses, most allowances, maternity pay, sick pay but not overtime, the value of salary sacrifice schemes, redundancy pay or benefits in kind.
- The number of men and women working in each of the four quartiles of the company's pay range (i.e. the four quartiles between the lowest paid employee and the highest paid employee). This is intended to highlight where women are concentrated in certain pay groups (e.g. it will highlight where few senior roles are held by women).
- For employees who receive bonuses, the 'gender bonus gap' during the 12 month period to 30 April each year. This should be calculated as the difference between male and female employees' average bonus payments. Bonus figure calculations will include profit sharing, performance, long-term incentive plans and cash equivalents for share payments.
- In addition to gender pay and bonus gap reporting, the proportion of male and female employees who received bonus pay during the 12 months prior to 30 April.
Employers can voluntarily include a narrative with their reports and/or further calculations by grades or job roles, which may be a useful way of trying to manage any negative criticism that could arise from the plain statistics required by the Government.
When will the reporting requirements come into force?
The Regulations are expected to come into force on 1 October 2016.
- Employers will have to collect the relevant pay and bonus data as at 30 April 2017.
- By 30 April 2018, employers will have to publish their full gender pay gap report analysing the data captured as at April 2017. This report must be published on a publicly accessible website and also uploaded to a Government website.
- Employers will need to produce an updated gender pay gap report by April each year.
- The Government plans to publish league tables comparing companies' gender pay gap information by sector from 2018.
The gender pay gap reports will need to be signed-off as accurate by a statutory director (or equivalent) of the company - this brings responsibility for the reports right up to Board level.
What happens if an employer does not comply?
Although the Government has removed its suggested civil penalties (fines) for non-compliance, it is likely that the press and probably also the Government will name and shame companies who fail to comply. The plan for league tables will also provide a relatively simple (if blunt) tool to encourage employers to address their gender pay gaps.
What should you do next?
Given the need to collect data in little over a year and publish full reports by April 2018, employers must start preparing the process for their analysis of gender pay soon. It will be essential to review pay and recruitment practices, and analyse where gender pay gaps have arisen and can be reduced or even eliminated.
The Stephenson Harwood Employment team can help you prepare for gender pay reporting and provide recommendations on how to minimise risks and protect your organisation from claims.