Mind The [Gender] Gap

As of April 2017 the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (“the Regulations”) will require most employers to publish a number of statistics about the gender pay gap that is present in their workforce. It is hoped employers will be more aware about gender pay gap in their own businesses and take action towards closing it down.

The ‘gender pay gap’ is a calculation that shows the difference between the average pay of men and women. According to the Office for National Statistics the difference in pay between men and women (working full time) was 9.4% (see ONS website). Whilst this is the lowest gender pay gap since records began in 1997 it shows that there is still a way to go for employers to level the playing field.


Do the Regulations apply to my business?

The duties under the Regulations apply to any private or voluntary sector employers who have more than 250 employees on 5 April in any given year from 2017 onwards. It will therefore apply to companies, LLPs, Partnerships, limited partnerships, any unincorporated bodies, sole traders any other type of employer.

The duties do not apply to any employer who is subject to the public sector equality duty, government departments or parts of the armed forces. Such organisations will be subject to similar obligations already.

Who is in the headcount of employees?

An ‘employee’ for the purpose of reporting includes anyone employed under a contract of service, apprenticeship or a contract to personally do work. This will typically include employees, casual workers and bank staff, zero-hours workers, contractors who are required to work personally. However it does not include partners (i.e. partnership or LLP members) or agency workers as neither are employed by the business.

Employers must also discount employees who are on sick leave, family related lease or sabbatical from the 250 headcount.

 

What do I have to publish?

The Regulations require the employer to publish four categories of statistics:

1.    The overall gender pay gap figures calculated using both the mean and median average hourly pay.

2.    Information on the employer’s gender bonus gap using both mean and median averages;

3.    The proportion of male and female employees who received a bonus in the same 12 month period.

4.    The proportion of men and women in each of the four pay bands (on a scale using the overall pay range) – this will how the gender pay gap differs across the organisation and at different levels of seniority.


The starting point – what counts as pay?

Pay is calculated on a gross basis and includes all basic pay, bonuses, allowances, pay for piecework, any fully paid leave (such as annual leave) and shift premiums. It does not include overtime pay, expenses, benefits in kind, or the value of any salary sacrifice schemes. Employers are required to determine each of the relevant employee’s average hourly pay.

Bonus pay will include remuneration of any form, whether that be money, vouchers, securities, options, interests in securities, and profit sharing, productivity performance or incentive commission.


The Maths:

1.    Identify all amount of ordinary pay and bonus pay paid to the employee during the relevant pay period (for example if a person is paid monthly use the pay month in which the ’snapshot’ date – 5 April falls).

2.    In the case of ordinary pay, exclude any amount that would normally fall to be paid in a different pay period.

3.    In the case of bonus pay, exclude any bonus that is apportioned to a period outside of the relevant period (for example exclude any commission that is paid in the relevant month but was earned in prior to then).

4.    Add together the adjusted ordinary and bonus pay

5.    Multiply the amount found under by ‘7 divided by 30.44’.

6.    Divide the amount by the number of working hours in a week for that employee.


Where and when do I publish?

Employers are required to publish their gender pay gap reports on their own website (if it has one) and must keep that information for three years. There is no proscribed manner that an employer must comply with – it must only present the information in a manner that is accessible to all employees and the public. Employers must also upload the information to a government website.

The Regulations allow employers to time to publish the required information at any time within 12 months of the snapshot date. Employers therefore have a high degree of flexibility over when to analyse and publish their information.

The first snapshot date is 5 April 2017 accordingly employers do not need to publish any data until 4 April 2018. Thereafter, the gender pay gap must be published annually not later than 12 months after the previous gender pay gap report.

What happens if I do not publish?

Although there is provision for the government to have implemented a civil fine for failing to report on gender pay gap the Regulations are silent on the matter. So, for now at least, the government are placing trust in employers simply volunteering the information freely.

It has been suggested that when the information is posted to the government-sponsored website, the government will publically identify (and therefore praise) those employers. The government has indicated that it may adopt a ‘naming and shaming’ approach to noncompliance.

 

Further information on the duty

If you have any questions or queries about how the new mandatory duties will affect your business please contact one of our employment team on 0113 203 1999.

You can read more at:


ACAS draft guidance: Managing gender pay reporting in the private and voluntary sectors

Equalities office:Mandatory Gender Pay Gap Reporting – Government response to the consultation on draft regulations