STOP PRESS: Gender Pay Gap Reporting
The Government has today (12 February 2016) published its long-awaited response to the consultation, Closing the Gender Pay Gap, issued in July 2015.
The response sets out details of the Government’s plans for gender pay gap reporting, together with draft Regulations for further consultation. This consultation ends on 11 March 2016 and the Regulations (subject to Parliamentary approval) will come into force on 1 October 2016.
The draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 make the following provisions:
- Employers (private and voluntary sector) with 250 or more employees will be subject to the rules on gender pay gap reporting. The Government has also announced an intention to extend the rules to the public sector.
- “Pay” is defined to include basic pay, maternity/sick pay, allowances, shift premiums and bonuses. It does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits.
- Employers will have until April 2018 (on a date of their choosing) to publish the first gender pay gap information in full, and will then be required to publish annually thereafter. However, employers must publish a ‘preliminary data snapshot’ in April 2017.
- The draft Regulations require employers to publish their overall mean and median gender pay gaps, using data from a specific pay period every April from 2017. Employers will need to calculate an hourly pay rate for each relevant employee. This will mean that average earnings figures will be unaffected by the number of hours worked. Employers will not be required to report according to grade or job type, only the overall pay gap.
- Separately, employers will need to publish the difference between the mean bonus payments paid to men and women. They will also be required to publish the proportion of male and female employees that received a bonus.
- In addition, employers will be required to report on the number of men and women in each quartile of their pay distribution. Employers must calculate their own salary quartiles based on their overall pay range.
- The Regulations do not require any ‘contextual narrative’ to explain the reasons behind a gender pay gap in an organisation, but this will be ‘strongly encouraged’ on a voluntary basis.
- The required information must be published in English, on a searchable UK website accessible to the public. The information must be retained on the website for three years, in order to show progress on reducing the gender pay gap. It must be accompanied by a written statement confirming that the information is accurate and signed by a director (or equivalent senior employee). Employers will also be required to provide confirmation to the Government that they have complied with the reporting requirements.
The draft Regulations do not themselves contain any remedy for breach of the gender pay gap reporting rules. As a requirement of the Equality Act 2010, the compliance and enforcement measures provided under the Act would apply, including enforcement by the Equality and Human Rights Commission (EHRC).
The Government has indicated its intention to run periodic checks to assess non-compliance with the rules, and to publicise the identity of employers who have not complied. Whilst it does not intend to create any additional civil penalties in the Regulations, the Government will keep the position under review in the first few years of implementation.
The Government is also promising an appropriate package of guidance and support for employers to ensure organisations are familiar with the requirements of the Regulations in advance of implementation.
A copy of the consultation response and the draft Regulations are available here
It is unlikely that the draft Regulations will change significantly following the current consultation exercise, so it’s important for employers to start planning for the steps they will need to take to comply with the reporting requirements. As a starting point, employers will need to establish whether their existing payroll systems can provide the necessary pay data and appoint someone to take responsibility for overseeing the publication of the required gender pay gap information.
The content of this article is for general information only. For further information regarding employment law and the gender pay gap, please contact Jeanette Wheeler or a member of Birketts' employment team. Law covered as at February 2016.