Since we wrote this blog, the government has amended the draft regulations on gender pay gap reporting, changing some of the information set out below. Our latest blog on gender pay gap reporting is Gender pay gap reporting: 5 tricky issues.
Users of Workbox, the employment team's online HR site,can access detailed information and advice on our dedicated Gender Pay Gap Reporting page, including advice on how to make all of the calculations and answers to FAQs.
The draft Equality Act (Gender Pay Gap Information) Regulations 2016 have been published following the government's 'Closing the Gender Pay Gap' consultation.
They will apply to employers in the private and voluntary sectors in Scotland, England and Wales with at least 250 employees who ordinarily work in Great Britain and whose contracts of employment are governed by UK legislation.
This means that approximately 7,960 employers (employing 34% of the total workforce) will be affected by the new rules.
The Regulations do not apply to public sector employers. The government has indicated that gender pay gap reporting obligations will be extended to them at a later date by separate legislation.
What information has to be published?
Affected employers will be required to publish:
- The difference in mean pay (as a percentage) between male and female employees;
- The difference in median pay (as a percentage) between male and female employees;
- The percentage difference in mean bonus pay between male and female employees;
- The proportion of male and female employees who received bonus pay; and
- The number of male and female employees in each quartile pay band (workforces need to be split into four equal pay groups each containing a quarter of the overall data).
Calculations of mean and median are to be based on gross hourly rates of pay.
The information has to be published on the employer's website every year and kept there for a minimum of three years. It will also have to be uploaded to a government sponsored website.
The report needs to be signed by a director or equivalent. There is the option of supplying explanatory narrative - something which the government is strongly encouraging.
The final Regulations are expected to come into force on 1 October 2016. Employers will have to publish their first report by April 2018, based on their pay data as at 30th April 2017. Bonus information will be based on bonus awards paid from April 2016 to April 2017.
What happens if an employer doesn't comply?
The government has the power to make it an offence not to publish the required information and to impose a civil penalty for non-compliance. So far it has decided not to do either of those things and will simply monitor how many employers choose to comply.
All an employer needs to do, according to the draft Regulations, is submit figures signed off by a director. At this stage of the Regulations, there is no way to ensure compliance with the detail of the Regulations, or even tell if the figures are correct. Employers don't have to show their workings or provide any evidence beyond the limited information discussed above.
The information published may have an important impact on an employer's brand and reputation. Although the envisaged government league tables will be at sector level, the media is likely to use the information to highlight differences between specific employers or employer groups. This negative publicity could lead to problems in recruitment or retention of staff.
If you are affected, how can you prepare now?
- Work out whether your business will be caught by the Regulations;
- Look at your bonus arrangements - the first set of data needs to include bonus payments made from April 2016;
- Update IT systems and payroll processes to ease gender pay reporting capabilities;
- Decide when you will publish your first gender pay gap report (must be by 30th April 2018);
- Gather any information to help provide contextual information alongside gender pay information if needed;
- Decide whether to carry out some equal pay auditing prior to the reporting obligations coming into effect. Take advice on how best to do this.
Impact and opinions
Opinions on the draft Regulations are divided, some welcoming the transparency the publication of the information will bring. Others think the Regulations will, at best, provide flawed information and, at worst, actually worsen workplace stereotypes and discrimination by deterring women from entering areas where they are already under-represented such as science, technology, engineering and maths.
What do you think about the draft regulations? Comment below or tweet us.