The Government has introduced requirements for organisations to publish and report on their gender pay gap. Employers will have to gather relevant information from their payroll systems and based on that calculate key statistics which will highlight the difference in pay between male and female employees within the organisation.
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which came into force on 6 April 2017, apply to employers with more than 250 employees and cover public, private and voluntary sector firms.
Employers must publish their gender pay gap data along with a written statement on their website as well as report the data to the Government through an online database.
The figures must be taken on the ‘snapshot date’ which has been set as 5 April. An organisation must ensure it has filed the information for the previous year by this annual date – so the deadline for the first year reported figures is 4 April 2018.
An organisation will be a ‘relevant employer’ under the regulations if it has 250+ employees based in England, Scotland or Wales. The employer must register with the gender pay gap reporting service through the Government website. Private sector organisations that are part of a group must report individually if they are relevant employers.
Who is an ’employee’?
An employee for gender pay gap reporting purposes is any person with a contract of employment with the organisation or a contract personally to do work.
What data must be published?
An organisation must report on its:
- mean gender pay gap in hourly pay;
- median gender pay gap in hourly pay;
- mean bonus gender pay gap;
- median bonus gender pay gap;
- proportion of males and females receiving a bonus payment; and
- proportion of males and females in each pay quartile.
The organisation will be required to use the figures taken on the snapshot date to calculate its mean and median gender pay gaps.
The calculations are based on ordinary pay, which includes basic pay, allowances, pay for leave and shift premium pay. It does not include overtime pay, redundancy pay, expense repayments or interest free loans.
The payment of bonuses to employees is also relevant. Bonuses for these purposes include any rewards related to profit-sharing, performance, incentives or commission. These can be paid in cash, securities or vouchers. Again, this does not include overtime pay or redundancy pay.
Guidance is given on www.gov.uk which explains how to gather the required data and how to calculate the relevant figures for the gender pay gap report.
Once the gender pay gap figures have been calculated these must be displayed on the organisation’s website, along with a written statement.
This statement must confirm that the published figures are accurate and have been signed off by an ‘appropriate person’, likely to be a company director.
Alongside this written statement, it is advisable for an organisation to include a supporting narrative which explains the figures. Adding a narrative helps the public to understand why a gender pay gap is present and what the organisation intends to do to close it. A company can display good corporate governance by clearly outlining the steps it intends to take to redress any pay imbalance.
The impact on companies
Schroders plc was the first UK company to go public – revealing that pay for female staff was 33% lower on average. They have put this down to there being fewer women in senior positions within many financial firms. They say that overall they do reward men and women fairly for similar work.
Many firms are said to be bracing themselves for a backlash when they publish their reports. Tata Steel and Rolls Royce have already said that any pay gap is likely to be down to there being only ‘a handful’ of female engineering apprentices and graduates. They were keen to emphasise that ‘manufacturers offer enhanced and competitive maternity pay and schemes, flexible working and structured career and training plans’ to their female employees.
Benefits of gender diversity
The new reporting requirements are aimed at increasing transparency and the Government hopes that, as a result, employers will be encouraged to close their gender pay gap. There are benefits to an employer that allows for greater gender diversity and the Government has tried to make relevant employers aware of these. There can be an increase in reputation should an employer publish favourable figures. This in turn can boost recruitment and help with staff retention. A more diverse workforce is also representative of society today and can help an organisation meet the diverse needs of customers and suppliers.
It is yet to be seen just how big the gender pay gap is at some of the UK’s largest companies, but there may well be some interesting figures emerging before April 2018.
This blog post was written by Elliot Gibson. For further information, please contact:
Sophie Brookes, partner, Corporate
T: 0161 836 7707