Mind the Gap: Are you ready for Gender Pay Reporting?

This article was first published in Recruitment International.

Disparity between male and female average pay continues to dominate the news, with evidence of the gender pay gap widening for women in their 30s and 40s in particular. Dubbed “Equal Pay Day”, 9 November 2016 marked the date from which women were effectively working for free for the remainder of 2016 according to statistics, despite equal pay laws providing equal pay rights for men and women doing like work, equivalent rated work or work of equal value.

In the wake of the October 2016 Asda tribunal decision, allowing over 7,000 women to bring equal pay claims by comparing themselves to men working in different roles at a possible cost to Asda of over £1m, 2017 will see a focus on transparency of workforce pay. On 6 April 2017, the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, comes into force requiring private employers to provide reports on gender pay.

Who has to report?

Employers with more than 250 employees on a “snapshot date” of 5 April in each year. To encourage senior executives in each entity to take ownership of gender pay issues in their workforce, each company in a group must report as a separate entity if they meet the 250 threshold.

 

What has to be reported?

  • Gender pay gap figures for mean and median average hourly pay and numbers of men and women in 4 pay bands.
  • Gender bonus gap figures for mean and median bonus pay over a 12 month period and proportion by gender of employees who received a bonus in that period.What is covered in “pay” and “bonus” and the methods of calculation to be used, are detailed in the Regulations and should be considered carefully. A narrative may be provided to explain anomalies in pay as well as any proposals for addressing them.Gender pay gap figures must be analysed each April and the report published within 12 months on the business website (publicly available for 3 years) and uploaded to a government website. Thereafter reports must be produced annually.

What about agency workers?

Agency workers seldom have a contract of employment with either the employment business supplying them or the end-user but they may be deemed to be the employees of the employment business for the purposes of gender pay reporting if they have a contract personally to do work, even if that is for a third party. This may bring many employment businesses in scope although this will arguably distort gender pay data in respect of their direct staff.

Who is an “employee”?

The explanatory notes to the Regulations refer to the wider definition of employee found in the Equality Act 2010, i.e. anyone employed under a contract of service, of apprenticeship or a contract “personally to do work”. This brings into scope casual workers, consultants and contractors who are required to personally carry out the work (i.e. they cannot sub-contract the work or employ their own staff to do it). Partners and LLP members are specifically excluded as is any worker not on full-pay at the snapshot date, e.g. those on family or sick leave (although they must be included in the gender bonus gap report). Employees based abroad with a close connection to Great Britain will be in scope too. There is an exception to the requirement to report on pay where you do not have pay data on an individual and it is not reasonably practicable to obtain it (although that individual will count in the 250 threshold) e.g. where a consultant is not on payroll and you do not have remuneration and working time records.

What should you do now?

  • Assess your workforce: will you be in scope with 250 “employees” on 5 April 2017?
  • Identify whether you have accessible bonus and pay data for employees.
  • Use the calculation methods in the Regulations to familiarise yourself and identify issues in advance.

Although the Regulations don’t contain enforcement provisions or sanctions, the government intends to publish tables by sector and may create a database of compliance, factors which may affect reputation, recruitment and retention for businesses. This is likely to be only the start of mandatory transparency on gender pay.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.