The mandatory gender pay gap reporting requirements affecting private and voluntary sector employers came into force on 6 April 2017. Household names are now reporting their gender pay statistics and coming under media scrutiny.
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 apply to any private or voluntary sector employer with 250 or more employees in Great Britain on 5 April each year (referred to as the ‘snapshot date’). ‘Employee’ means anyone employed under a contract of service, a contract of apprenticeship or a contract personally to do work, so this includes casual workers and some contractors.
Public sector employers are outside the scope of the regulations but a similar regime applies to them.
Top tips for transparency
- Close the gap. Transparency can only be a truly comfortable experience where the information being provided is positive. If your company has yet to reach the 250 employee threshold for reporting, scrutinise your pay information now to identify and address any discrepancies before reporting becomes mandatory.
- The voluntary accompanying narrative is your friend. While entirely voluntary, the provision of a contextual narrative alongside the gender pay gap information is encouraged in Acas guidance. Even the most committed employer may find an unavoidable disparity between the pay of men and women. Contributing factors could, for example, include the fact that women are more likely to work part time (and therefore be paid correspondingly less) than men. While not evidence of inequality or discriminatory practices, such data, in the absence of explanation, could lead to undeserved negative attention. Voluntary narratives could explain this.
- Check what constitutes ‘pay’. To generate overall gender pay gap figures, employers need to calculate an hourly rate of pay for each employee. This is a composite rate of pay that takes into account basic pay, allowances, pay for piecework, pay for leave, shift premium pay and bonus pay. Interestingly, shift pay premiums are taken into account in this calculation, but overtime payments are not. Make sure only the relevant components are included.
- Check the bonuses. Bonus pay forms part of both the gender pay gap calculation and a separate gender bonus gap calculation. However, not all bonuses form part of the gender pay calculation. According to Acas guidance, bonuses are only included in these calculations if they have actually been received within the relevant bonus period. The period to which a bonus is attributed is not relevant for these calculations – it is simply the point at which payment is received. For example, a bonus awarded because of good performance in 2015 but received in March 2017 will need to be included in calculations for the relevant bonus period 6 April 2016 to 5 April 2017.
The aim of the regulations is to identify and address any discrepancies. If the recent media coverage has taught us anything, it is that no employers are perfect, but identifying disparities in pay and taking action to address them is an essential step in the right direction.
Emma Carter is an associate at Dentons