What is Gender Pay Reporting?
Gender Pay Reporting is a new legislation that will require businesses to publish details of the difference between the pay and bonuses of male and female employees, as well as the proportion of men and women who received a bonus.
Why is it Being Introduced?
On average men are paid more than women and this is monitored by the government on an annual basis. In 2015 the government announced that it would ’end the gender pay gap in a generation’ and published proposals for compulsory gender pay reporting.
When do the New Rules Come Into Force?
Subject to parliamentary approval it is expected that the new regulations will come into force on 6 April 2017.
Employers will then have to publish details of the gender pay gap and bonus gap annually based on data available on 5 April each year from 5 April 2017. The bonus information must be based on the preceding 12 month period, being the 12 months prior to April 2017. The first publications must be made by 4 April 2018. This would mean that bonuses paid as early as April 2016 will be included in the published data.
There will be similar obligations for public sector employers although the dates are slightly different, with the snapshot of data being from 31 March each year and the first publication being required no later than 30 March 2018.
Who Does it Apply To?
The duty will apply to companies with 250 or more employees which includes anyone working under a contract of employment, a contract of apprenticeship or a contract personally to do work, and so could include some self employed persons.
How is the Number of Employees Calculated?
The total number of employees should be counted on 5 April each year, regardless of whether they work full or part time. The partners in a firm should be included for the purposes of the employee headcount but would not need to be included in the calculation of the gender pay or gender bonus gap.
What Information Must Be Published?
- The difference in mean and median pay between male and female employees
- The difference in mean and median bonus pay between male and female employees
- The proportion of male and female employees who were paid bonus pay
- The proportion of male and female employees in each quartile of their pay distribution
Organisations are not required to comment on the results but may find it beneficial to include an explanation of them, particularly where there is a clear gender pay gap, in order to avoid reputational damage. If applicable, this could include an explanation that the results are better than other companies within the same industry or the wider economy and any plans the business has to rectify any gender gaps revealed by the results.
Where Must it be Published?
The results must be published on the employers own website and a government site and must be confirmed in a written statement by an appropriate person, such as a Chief Executive or Managing Director.
What Happens to the Information?
Employers are expected to use the information to help understand any underlying causes for the gender pay gap and take steps to minimise it. This would help an employer to demonstrate that they are fair and progressive as well as to ensure higher levels of morale from a workforce who feel valued and engaged in a business committed to dealing with any issues of inequality.
The government has stated that it will closely monitor compliance with the duty and will publish tables showing the reported pay gaps by sector.
What are the Consequences for Non-Compliance?
At this stage it is not proposed that there would be any penalties for failing to comply with the regulations and indeed there are currently no procedures in place to enforce compliance. However, the draft regulations do state that failure to comply with the duty would constitute an unlawful act, which the Equality and Human Rights Commission would be entitled to take action in relation to.
There would also be a serious risk of damage to a company’s reputation if they failed to comply with the rules, which would also affect their ability to secure further business in the future, as well as attract new employees to come to work for them.
The government has stated that it will keep the possibility of enforcement under review and may introduce a penalty if compliance levels are low.
What Can I Do Now?
Given that the first publication in April 2018 will include bonus payments that were made last year it is too late to do anything differently now to change those figures. However it is certainly worth businesses starting to take action now to consider if the reporting obligations will apply to them, and if so, how the relevant information could be collated and whether any adjustments should be made to salary etc. before the first reports are made next year.
Above all it is essential that businesses understand the new regulations, which are complex and have various exceptions and nuances which are crucial to compliance. We will be delivering a seminar on the new rules in the coming months. To find out more please click here.