Gender Pay Gap

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On 6 April 2017 the new Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 are expected to come into force. They will require all private and voluntary-sector employers with 250 or more employees to publish prescribed information about their gender pay gap results. The results will need to be produced annually on one “snapshot” date (although the bonus information will cover the whole year). 

In the private sector, the first Gender Pay Reports will have to be published by no later than 4 April 2018. They will need to be based on hourly pay rates as at 5 April 2017 and bonuses paid between 6 April 2016 and 5 April 2017. In practice employers will publish much earlier than 4 April 2018. Public sector organisations will have to publish no later than 30 March 2018, based on hourly pay rates as at 31 March 2017 and all bonuses paid between 1 April 2016 and 31 March 2017.

According to the draft regulations draft guidance, employees for these purposes are anyone who “works under a contract of service, a contract of apprenticeship or a contract to do work personally”. This will include zero hours’ workers, apprentices and some contractors. It will include executive directors. It may include non-executive directors too. The draft regulations currently don’t include Partners in partnerships.

There are detailed requirements on how you work out pay. Pay is made up of ordinary pay and bonus pay.  It seems that occasional overtime pay isn’t included in either type, which could skew the figures..  

In companies with a group structure, each legal entity will need to report its data. There is no legal requirement on smaller employers to report data, but they will be encouraged to do so. Employers whose headcount varies will have to report in any year during which the headcount is 250 or more.  However, it is highly likely that smaller employers will have report this information from 2018 or 2019 onwards. As with pension auto-enrolment and other employment changes, there may be a tiered approach.

There are 6 gender pay metrics that need to be reported on:

  • The difference between the mean (average) hourly rate of pay of male full-pay employees and that of female full-pay employees (Mean Gender Pay Gap)
  • The difference between the median (middle) hourly rate of pay of male full-pay employees and that of female full-pay employees (Median Gender Pay Gap)
  • The difference between the mean bonus pay paid to male employees and that of female employees (Mean Gender Bonus Gap)
  • The difference between the median bonus pay paid to male employees and that of female employees (Median Gender Bonus Gap)
  • The proportions of male and female employees paid bonus pay (Proportion of men and women getting a bonus)
  • The proportions of male and female employees in the lower, lower middle, upper middle and upper quartile pay band (Proportion of men and women in each of four pay quartiles)

The Gender Pay Report covering all these has to be signed by a director or other authorised person (such as an HR Manager) and published in the English language, by April 2018, on the company website that is accessible to employees and the public. The report will also have to be uploaded to a Government website, which isn’t operational yet. Employers can add an explanation or commentary if they wish, but that isn’t compulsory. ACAS has issued draft guidance, which will probably be updated when the changes are introduced in April.

Failing to publish this information may result in the Equality and Human Rights Commission using it’s enforcement powers.  It can currently investigate, issue an unlawful act notice, to require an action plan for change, or obtain a court injunction to prevent an unlawful act. Additional powers to ensure compliance seem sure to be introduced in April 2017 or at some point afterwards. A future regime of fines seems likely. An organisation’s reputation and it’s goodwill and share values could be adversely affected by a lack of reported information or a large gender pay gap. If there is a void where the information should be, people may speculate why that’s the case and reach their own conclusions. Crucially also, the ability to recruit and retain employees may be prejudiced by a lack of reported information or a large gender pay gap. There will be other indirect affects too, such a some employers may lose contracts that have to be won or retained through a tendering process.