In this blog, Dawn Robertson, a Partner in our Employment Law team, answers some important questions which many employers and others have on the upcoming gender pay reporting changes.
1. Who is covered?
Gender pay reporting will apply to employers with 250 or more employees – an ‘employee’ is anyone who ordinarily works in Great Britain. Their contract of employment must also be governed by UK legislation. An interesting point is for LLPs, who will be covered if they have more than 250 employees. They will not have to report data concerning their LLP partners which would likely have a big impact on any gap data.
2. When will it come into force?
The regulations are expected to come into force on 1 October 2016. Those covered would have to publish their first reports in April 2018 with figures being based on data from the previous pay period from each April. This means the data should be a snapshot from 30 April 2017.
3. What does ‘pay’ mean?
Pay includes many forms of remuneration and benefits but it does not include everything. It can be easier to cover what is not included, such as; overtime pay; expenses; salary-sacrifice schemes; redundancy pay; benefits in kind; pay in arrears; pay for a different pay period, and tax credits.
Without going into ‘pay’ in too much depth, it will also include the mean and median pay gap figures as well as a separate analysis of bonus payments made through any 12-month period. Essentially mean and median represent the average and the mid-point figures respectively.
4. What figures actually need to be published?
Generally, it will be the difference which is ultimately published and not the figures themselves. So, for example, in terms of the proportion of male and female employees receiving bonus pay it will be the percentage difference.
5. I think that my organisation will have a gender pay gap, what can I do?
There will be an opportunity for employers to offer a narrative with their figures. This is a voluntary aspect but is something which the Government is encouraging. It may also be useful for employers who think that there is a justifiable or real reason behind their pay gap to provide some context to their figures – such as detailing action that has or will be taken.
6. There doesn’t seem to be much in the way of enforcement mechanisms, what is the risk of not reporting?
As the current regulations sit it is noticeable that they lack any real enforcement mechanisms. That said, it has been publicised that a naming and shaming system will be operated using lists of the ‘best’ and ‘worst’ employers. It is also likely that groups pushing for gender pay reporting will attempt to target and name organisations who fail to publish anything which may then lead to further questions being asked by the public.
7. How is the information to be published?
The information needs to be published on an organisation’s UK website before being uploaded to a Government sponsored site. One question is the procedure for organisations who are required to report but do not have a website. Presumably this is something that will become clearer nearer the time and it may be that the information can simply be uploaded to the Government site.
8. How can I prepare for the changes?
Many employers will have undergone equal pay audits but if any have not then this is a good place for them to start on an informal basis. Pay audits can give an indication of current situation within an organisation to help identify what needs to be done to improve.
Beyond this, if issues are identified employers should consider whether there are any justifications, legal or otherwise, as to why there is a gender pay gap in a certain part of their organisation.
Employers who are going to be covered by pay reporting should also begin considering, if they haven’t already, the status of their current systems for analysing pay data. This will include whether there are any barriers or issues which need to be improved on to allow proper reporting. It will be important for employers to begin monitoring changes as things move forward. This will allow improvements or areas of need to be identified.
9. Can reporting lead to claims against our organisation?
Some concerns have been raised through the process that the disclosing of gender pay information might lead to employee claims, such as for equal pay. While any finding of a large gender pay gap is not likely to be an ideal scenario, having a gender pay gap alone does not of itself mean that employers have breached equal pay laws/requirements due to various issues which are at play within the gender pay gap (some are out of the control of employers).
It is important for employers to understand what is required of them under the reporting requirements and to begin preparation now so that they are not caught out as the first key date, 30 April 2017, approaches. There may be some who question why they should comply with the reporting given the lack of strong enforcement mechanisms but in a world of instant media and press coverage most businesses will not want to have rumours over why they did not publish gender pay data circulating.
The Government consultation can be accessed here. The draft regulations are contained toward the end of that document.
Get in touch
If you have any questions regarding gender pay reporting, such as whether your business is covered or any concerns you might have, then please contact a member of our employment team.