GENDER PAY GAP- WHAT IT MEANS

For the private and voluntary sectors

The regulations cover any employer with 250 or more “relevant” employees in England, Wales and Scotland (but not Northern Ireland). In companies with a group structure, each legal entity will need to report its data. There is no legal requirement on smaller employers to report data, but they are encouraged to do so.

Employers whose headcount varies will have to report in any year in which the headcount is 250 or more.

The public sector

The requirements for the public sector largely mirror those for the private sector but the public-sector requirements have been introduced as part of the existing public-sector equality duty, rather than as a stand-alone requirement, and the annual “snapshot” date on which the pay information is collected is 31st March for public sector employers, as compared to 5th April for private and voluntary sector employers.

Any authorities not listed as public bodies will be covered by the private and voluntary sector gender pay reporting regulations, as will private and international schools.

While the aim is to make the reporting requirements consistent across the public and private sectors, the public sector already has specific duties on equality, which the regulations have to reflect. There are also differences between the public sector equality duties in Wales and Scotland as compared to England, and it remains to be seen how these differences will work out in practice.

How is an employee defined?

The regulations apply the same definition of employee as the Equality Act 2010. This is a broad definition which includes zero hours’ workers, apprentices and some self-employed people.

Agency workers will be included in any reporting by the agency with which they have a contract of employment.

Employees will be covered by the regulations if they are employed on the relevant snapshot date, work mainly in England, Wales or Scotland, and are on full pay. Employees on reduced rates of pay while on maternity leave or sick leave are excluded.

How is pay defined?

Ordinary pay’ means basic pay; allowances; pay for piecework; pay for leave; and shift premium pay. It does not include overtime pay; redundancy pay; pay in lieu of leave, or non-monetary remuneration.

‘Bonus pay’ means pay in the form of money, vouchers, securities, securities options, or interests in securities; and pay that relates to profit sharing, productivity, performance, incentive or commission. Non-consolidated bonuses are also included.

What data must be published?

Employers are required to publish six metrics:

  • The difference between the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees ( ‘the mean gender pay gap’);
  • The difference between the median the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees (‘the median gender pay gap’);
  • The difference between the mean bonus pay paid to male relevant employees and that of female relevant employees (‘the mean gender bonus gap’);
  • The difference between the median bonus pay paid to male relevant employees and that of female relevant employees (‘the median gender bonus gap’)
  • The proportions of male and female relevant employees paid bonus pay (‘the proportions of men and women getting a bonus’); and
  • The proportions of male and female relevant employees in the lower, lower middle, upper middle and upper quartile pay band (‘the proportion of men and women in each of four pay quartiles’).

Calculations for the pay gap metrics are to be based on a single pay period around the “snapshot date” of 5 April (private and voluntary sectors) or 31 st March (public sector), in each year, while bonus gap metrics cover the whole year up to the relevant date. The Regulations provide detailed instructions on how the figures should be calculated.

What format should the report take?

The data required from employers must be published in English, by April 2018 and annually thereafter. Employers have flexibility on when they publish their report, meaning that if they wish they can align in with other internal reporting processes.

Employers must publish the required data on the government’s gender pay gap reportingservice website.

For private and voluntary sector employers, the information will have to be accompanied by a statement confirming its accuracy, signed by a director or equivalent, which includes their name and job title.

Once the report has been published on the reporting service website it automatically appears on the government’s viewing service website, where any interested person is able to access it. The viewing service website also lets people know if a report is late.

Employers must also publish their pay data on their own organisation’s website in a manner that is accessible to employees and the public and must ensure that it remains there for at least three years.

There is no requirement to publish any accompanying narrative or commentary, but many organisations will wish to explain what the figures mean.

What are the sanctions for non-compliance?

Non-compliance will amount to an unlawful act falling within the enforcement powers of the Equality and Human Rights Commission, and as such, could attract unlimited fines. The Commission’s powers of enforcement are set out in the Equality Act 2006.

The Equality and Human Rights Commission aims in the first instance, to resolve non-compliance through correspondence with non-compliant employers. Where formal enforcement action is required, the Commission will take action as set out in its report Closing the Gender Pay Gap: Enforcing the Regulations.