Gender pay gap reporting – draft regulations issued

In October last year we reported on the government’s move to require larger employers to reveal gender pay gap information. Consultation on the proposals ended last September and the Government Equalities Office has now issued a further consultation document which sets out draft regulations and a summary.

The regulations will apply to private and voluntary sector employers in England, Wales and Scotland with at least 250 employees. Although the draft regulations do not cover the public sector, the Prime Minister has said that mandatory gender pay reporting will be extended to the public sector, in time.

Time scales

It is expected that the regulations will come into force on 1 October 2016 (it had previously been thought that they would come into force in April 2016). Employers will be required to publish data within 12 months of the ‘relevant date’ (the relevant date will be 30 April 2017 and then each 30 April thereafter). In practice, this means that the first publication deadline will be April 2018.

What information will employers have to reveal?

The regulations will require employers to reveal the following information:

The mean gender pay gap,
The median gender pay gap,
The difference between mean bonus payments paid to men and women,
The proportion of men and women that receive a bonus,
The number of men and women in each quartile of their pay distribution.

The mean and median pay will be calculated using data from a specific ‘pay period’ each April. The pay period will reflect the usual payment interval into which 30 April falls. In other words, employers who pay their employees monthly will use the pay month in which 30 April falls and employers who pay their employees weekly will use the pay week in which 30 April falls.

The calculations for bonus pay will be based on the 12 months preceding the ‘relevant date’.

‘Mean’ is an average that is calculated by adding together all of the observations in a set of data and dividing the total by the number of observations. ‘Median’ is the middle figure in an ordered data set (if there is an even number of observations then the middle two figures are added together with the total being divided by two). ‘Quartiles’ split an ordered data set into four equal groups, with each ‘quartile’ containing a quarter of the data.

Calculating pay

In order to get over the problem of different employers working different numbers of hours, employers will be required to calculate the gender pay gap using hourly pay.

Pay will include:

Basic pay,
Paid leave,
Maternity pay,
Sick pay,
Area allowances,
Shift premium,
Bonus pay,
Other pay (including car allowances paid through the payroll, on call and standby allowances, clothing, first aider or fire warden allowances).

Pay will not include:

Overtime pay,
Expenses,
The value of salary sacrifice schemes,
Benefits in kind,
Redundancy payments,
Arrears of pay,
Tax credits.

Where will the information be published?

The information will have to be published in English on the employer’s website so that it is accessible to employees and to the public. There will also be a requirement to upload the information to a government sponsored website. The information will have to be displayed on the company’s website for at least three years.

Comment

The government have said that there will be no formal sanctions for employers who fail to comply with the requirements for gender pay gap reporting, except that those employers who do not comply will be ‘named and shamed’ on the new government website.

There is no requirement to publish any data before April 2018. However, employers need to prepare; the data on mean and median gender pay gaps will be based on 30 April 2017 and the data on bonuses will be for the 12 months preceding April 2017.

Employers should start to carry out their own analysis, based on the statutory methodology and put in place a plan to try and reduce any gap that they discover.

For a copy of the draft regulations and summary, please click here.

17 February 2016

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