Gender Pay Gap Reporting

New legislation requires employers who have 250 or more employees to annually publish statutory calculations that show how large their gender pay gap is. This is the discrepancy between the levels of pay that male and female employees earn.

This legislation could affect any larger business in any industry. Therefore, it is important to know when this law comes into effect and what to do about. It cannot be ignored and will need to be implemented by companies sooner rather than later.

Why has gender pay gap reporting been introduced?

The government committed to introduce the requirements at the 2015 General Election and has followed through on that commitment. The UK is one of the world’s first countries to enforce gender pay gap reporting as a key element of governmental policy aimed at eliminating the gender pay gap.

Although the gender pay gap is at 18.1 per cent as of April 2017, a record low according to the government’s Equalities Office, there is still some way to go to eradicate the discrepancy between the earnings of men and women.

When does the legislation come into effect?

 The regulations take effect from 5th April 2017 and 31st March 2017. The first date is predominantly for private and voluntary sector employers, and the second is mainly for public sector employers. All employers will be given up to 12 months for the data on their gender pay gaps to be published. It must also be put on the employer’s website as well as a government site.

What businesses need to comply with the regulations?

Any employer with a headcount of 250 or more employees either on 5th April or 31st March, depending on the industry sector, has to comply with the regulations. Although aimed at larger businesses, the government and organisations such as ACAS consider that there may well be advantages for employers of all sizes to look into the implications.

As an example, a report could show that men in a business earn 10 per cent more pay per hour than women and receive 5 per cent more in bonuses while employed in the same role. It may also demonstrate that the workforce’s lowest-paid quarter is mainly women. Publishing the gender pay gap means that this data will be available to employees, customers and potential recruits, providing information that could give a company a positive or negative image to the public at large.

It may be appropriate for employers to think about taking new actions, or speeding up those already taken, to bring down or eliminate totally their gender pay gaps.

How are employees defined for these regulations?

Taken from the Equality Act 2010, there is a wider definition of who counts as an employee for this legislation’s purposes. Some self-employed people are included alongside workers, and agency workers are also included, though these are counted by the agency that supplies them.

What calculations need to be carried out?

Employers have to carry out six calculations and publish them. They must be confirmed by a chief executive or other appropriate person. These calculations need to show:

  • The average gender pay gap as a mean average
  • The average gender pay gap as a median average
  • The average bonus gender gap as a mean average
  • The average bonus gender gap as a median average
  • The proportion of men receiving a bonus payment and the proportion of women receiving a bonus payment
  • The proportion of men and women, when divided into four groups, ordered from lowest to highest paid

Employers can provide a narrative, if they wish, with their calculations, though it is not mandatory. A narrative may explain the reasons for the results and outline details about actions being taken so that the gender pay gap is reduced or eliminated.

As an example, an employer might show that the results provide them with a challenge if most of the executives who get the highest bonuses are men, and they can outline what they propose to do about it.

Equally, an employer could demonstrate successes whereby there is a lower bonus pay gap because there has been a change to the company’s bonus policy.

Plans for long-term results could also be delineated through an accompanying narrative, perhaps by encouraging women to apply for junior roles through a recruitment campaign. Although initially this could have an effect on the gender pay gap balance as more women would be on starting salaries, a company could show how this should balance out in the future as women rise up the career ladder and earn more.

Employers in the science and engineering sectors might also want to scrutinise the way that women are underrepresented in these industry areas and target females to encourage them to apply for positions that will enable them to move on to higher-paid work and continue to reduce the gender pay gap.

Supporting women in the workplace

The government has a range of work to support women in the workplace. These regulations are aimed at narrowing the gender pay gap. Of course, the ultimate goal is to eventually eliminate it, though this is expected to take several decades.

The Minister for Women and Equalities, Justine Greening, wants women to have the same opportunities as men in the workplace to fulfil their potential, saying: “We have more women in work, more women-led businesses than ever before and the highest proportion of women on the boards of our biggest companies. This has helped us to narrow the gender pay gap to a record 18.1 per cent — but we want to eliminate it completely.

“Helping women to reach their full potential isn’t only the right thing to do, it makes good economic sense and is good for British business. I am proud that the UK is championing gender equality and now those employers that are leading the way will clearly stand out with these requirements.”

Employers are being encouraged to move forward with plans to reduce their gender pay gap, and with results being published from next year, they can ensure that they are being seen as doing the right thing by customers and their own employees. They can promote themselves as businesses that are good to work for as well as positioning themselves positively in a competitive marketplace where consumers can, and often do, vote with their feet.

Disclaimer: The information provided through Legislation Watch is for general guidance only and is not legal advice. Legislation Watch is not a substitute for Health and Safety consultancy. You should seek independent advice about any legal matter.

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