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Briefing Note

Gender Pay Gap Reporting Explained

Organisations with 250 or more employees on the ‘snapshot date’ of 5 April annually have to comply with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (‘the Regulations’) and publish gender pay information by 4 April the following year.

For public sector employers, the snapshot date is 31 March and the publication date 30 March of the following year. In addition to being published on the organisation’s own website the information must be registered at: https://www.gov.uk/report-gender-pay-gap-data

This Briefing Note is a summary of the aims of the the Regulations and how employers must comply with them.

What is the gender pay gap?

The gender pay gap is different from equal pay.

The obligation to pay men and women the same for carrying out the same or similar jobs or for carrying out work of equal value is known as equal pay. Failing to pay equal pay is unlawful. The gender pay gap, however, shows the difference between the earnings of men and women (calculated on a mean and median basis). Organisations are “expected” to have a gender pay gap. You just have to look at the figures which organisations have already published. If your organisation falls within the reporting requirements and shows a gender pay gap this does not automatically mean you are discriminating against either men or women or that you are failing to pay equal pay.

What is the aim of establishing any gender pay gap?

The aim of government is for the reporting to be used to assess how effectively talent is being used within the workplace and, if there is a gap, for organisations to consider the reasons for that gap and how it can be addressed.

Meaning of 'Employee'

The definition of “employee” is wide under the Regulations. For example, it includes casual workers and bank staff as well as those engaged under a zero hours contract. Some contractors and self-employed individuals as well as employees working abroad also have to be included in the total. If you are close to the threshold of 250 “employees” you should seek advice about who is and is not included to ensure you do not inadvertently fail to report.

What must be published?

The following information must be calculated and published:

  • The difference in mean hourly pay between male and female employees, expressed as a percentage.
  • The difference in median hourly pay between male and female employees, expressed as a percentage.
  • The difference in mean bonus pay between male and female employees over a period of 12 months, expressed as a percentage.
  • The difference in median bonus pay between male and female employees over a period of 12 months, expressed as a percentage.
  • The proportion of male and female employees who received bonus pay during the 12-month period.
  • The proportion of male and female employees in each quartile pay band.
  • A written statement, authorised by a senior person with appropriate authority, confirming the accuracy of the publication.

The calculations can be complex and the requirements specific.  Thought needs to be given to what is “pay” and “bonus”.  For example, overtime and benefits in kind are excluded from the definition of pay but share options and share schemes are included in the definition of bonus! You may need to seek advice on what to include and what not to.

The mean figure gives an overall indication of the gender pay gap. As this figure could be distorted where, for example, bonuses are only paid to board members or very few people, a median figure is also required. The theory is that the median figure indicates the reality in the middle of an organisation.

Guidance produced jointly by Acas and the Government Equalities Office (‘GEO’): “Managing gender pay reporting in the private and voluntary sectors” (“the Guide”) also recommends that the written statement includes a supporting narrative, explaining any apparent gender pay gap and what measures are being taken to address the gap, but this is voluntary.

A copy of the Guide can be downloaded at:

http://www.acas.org.uk/media/pdf/m/4/Gender_Pay_Reporting_GUIDE3.pdf

Failure to comply with the reporting requirements

Whilst the data does not need to be published until 4 April (or 30 March) annually, the Regulations and calculations are complex and requires thought and planning. It is always best to do the calculations as shortly after the snapshot date as possible.

Who and what should be included is complex too.

Once done, organisations should take time to analyse their results and may want to discuss them with their workforce, stakeholders and other third parties before they need to be published. But bear in mind your preparations will be disclosable in any employment tribunal proceedings unless they are legally privileged. We can help with that, as well as discuss the data and tactics.

There are no enforcement provisions or sanctions within the Regulations for failing to report.  Whilst no automatic penalties are imposed, a failure to comply could be seen as an ”unlawful act” of discrimination for the purposes of section 20 of the Equality Act 2006. In these cases the Equality and Human Rights Commission (‘EHRC’) is empowered to take enforcement action, although whether it has the resources and inclination remains to be seen.

Benefits to businesses

The Guide emphasises that the aim of the Regulations is to encourage gender diversity and equality, allowing employers to help staff to reach their full potential and so lead to greater productivity and increased financial returns.

Voluntary initiative

Many employers will not be required to publish gender pay gap information as they do not employ 250 or more employees.  As an alternative there is a voluntary initiative called Think, Act, Report… which provides employers with a framework to formulate an action plan to assist in closing the gender pay gap.  More information is available at www.gov.uk/think-act-report.

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Expert, pragmatic and affordable advice

Providing you with help worth having - for you and us it's personal.

Simon Quantrill, Managing Partner

Contact me on

01473 688 100

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