Gender Pay Gap Reporting

Partner Sue Dowling, in our Employment Law team, discusses gender pay gap reporting and some of the problems with the current systems.

The gender pay gap

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (“the Regulations”) comes into force on 6 April 2017 and applies to private and voluntary sector organisations with 250 or more employees and provides for mandatory gender pay gap reporting. 

Similar requirements are also expected to come into force for public sector organisations.

Why worry? 

Numerous surveys have been conducted on the extent of the gender pay gap in the United Kingdom, and the figures are stark. The Office for National Statistics asserts that the gender pay gap is in the order of 18.1% for all employees (i.e. including full-time and part-time employees). The Institute for Fiscal Studies has concluded that men in their 30s tend to see their wages increase, while women’s wages tend to plateau, the conclusion being that women will be penalised financially as a result of having children. 

The gender pay gap is far from a perfect measure of gender inequality; focusing on pay, it blurs the distinction between women choosing not to follow traditional working patterns, and discrimination that prevents them from advancing their careers. However, the Regulations are a good attempt to drive change by highlighting disparity in pay between men and women across the entire workforce (separate to equal pay which focuses on equality of pay between men and women doing comparable jobs).

Reporting requirements

The requirement is to publish data captured at a snapshot date, the first being 5 April 2017, albeit the information needs only to be published within 12 months of that date. 

That means that by 4 April 2018, relevant employers must publish:

1. Mean and median gender pay gap figures, based on hourly pay as at the snapshot date. The definition of ‘pay’ includes 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). However, it does not include any overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay or tax credits. The gross hourly rate of pay is determined using the weekly pay for each employee and dividing this by their weekly basic paid hours.
2. Number of men and number of women in each of four pay quartiles as at the snapshot date. Each quartile must include an equal number of employees, organised according to their hourly pay rate, from lowest to highest paid. 
3. Mean and median overall gender bonus gap figures in the year ending with the snapshot date. A "bonus" is widely defined as "any form of remuneration that is in the form of money, vouchers, securities, securities options, or interests in securities, and relates to profit sharing, productivity, performance, incentive or commission". Bonus pay must be included when calculating the employee’s normal pay, although bonus payments will be calculated separately and published in a separate gender bonus gap report.
4. Percentage of men and percentage of women who received a bonus in the year ending with the snapshot date.

The information must be reported, in a preset format, and posted on the employer’s website for at least three years. It has to be fully accessible to employees and third parties. Similarly the same information has to be submitted to a Government website where it will be available for analysis. The information has to be signed off by a senior person within the employer. Thus, for a company, it has to be signed off by a director and the director must confirm that the information included is accurate. 

Whilst the Regulations themselves do not specify the precise sanction for failing to publish all of the required data, it would be a bold decision by an employer to rely on any perceived lack of sanctions in the Regulations to decline to publish statistics.

Practical steps 

• Do a “test run” pay gap analysis to identify any significant pay gaps, decide how best to manage them and address any material issues. 
• Keep senior management informed including, in particular, the director who will be required to sign a statement of accuracy when the report is published.
• Consider carefully any internal and external communications when the data is published. 
• Consider whether you need to review/restructure your remuneration packages to improve your gender pay gap figures. 
• If there is a significant gender pay gap then take steps to reduce it, or prepare a statement explaining the differences in pay and what steps are being taken to promote diversity.

ACAS guidance 

ACAS guidance “Managing gender pay reporting in the private and voluntary sectors” offers useful assistance on how to reduce the gender pay gap, and some employers will find this invaluable. 

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.