New Gender Pay Reporting Requirements
Despite the Gender Pay Gap (GPG) being at its lowest since records began, average pay for men is still greater than for women. In an attempt to reduce the GPG, the Government is proposing to enact regulations that will introduce mandatory GPG reporting for employers with a minimum of 250 employees. Lisa Outram, Solicitor in the Employment team at The Wilkes Partnership, discusses the upcoming changes.
Background
The previous government set up the “Think, Act, Report” initiative where employers were encouraged to voluntarily publish the GPG within their organisation. Despite more than 275 companies signing up to the scheme, only a handful of signatories have actually published this information voluntarily. The failure of this scheme led to the Government introducing new regulations under the Equality Act 2010.
It is therefore expected that, from 1 October 2016, private and third sector employers with a minimum of 250 employees will be required to collect data and publish an annual report showing the overall GPG in their organisation.
What will specifically be required by the new regulations, and when?
The first GPG reports will not need to be published by affected employers until April 2018, although it will be necessary for those employers to have a snapshot of GPG data prepared for 30 April 2017. Affected employers will need to ensure that the information is published on their websites, and is available for both employees and the public to access. It is expected that the obligation will be extended to public sector employers in the future.
The GPG report figures will be calculated using both mean and median hourly pay over a specific pay period. This is likely to be either weekly or monthly, depending on the usual pay cycle of the employer. It will be necessary to include information on the gender balance in each of four salary quartiles, ranging from the lowest paid to the highest paid within the organisation. The intention is to indicate how the GPG differs across the organisation.
In addition to the obligation to publish the overall GPG, affected employers will also have to publish their “gender bonus gap”. This figure can be established by calculating the difference between the average bonus payments paid to men and women over a 12-month period, and the proportion of male and female employees that received a bonus.
Implications
Lisa Outram explains that, “The idea behind the scheme is to increase employee confidence in the remuneration process, encourage transparency over the GPG, and encourage employers to take action to close the gap. However, it does not appear that there will be any significant consequences for companies who fail to comply with these obligations.”
Lisa Outram adds, “Whilst the Government did consider whether a civil enforcement system would help to ensure compliance with the regulations, it is not proposing to introduce one at present. It is, however, proposing to run periodic checks to assess non-compliance, identify those employers who publish full and explanatory information and possibly publicise the identity of employers who are known not to have complied.
“It is therefore advisable for employers with at least 250 employees to start taking steps now to prepare for compliance with these new regulations. This may include, for instance, a review of existing software to check that the necessary calculations can be undertaken.”
To discuss what these changes will mean for you or your business, please contact Lisa Outram or any other member of the Employment Team, on 0121 233 4333.