What is the Gender Pay Gap?
The gender pay gap is the average difference in hourly pay between men and women. Typically, firms with a high number of men in senior roles, with more women occupying junior roles, will have a larger gender pay gap.
You often hear people referring to equal pay, however, this is different as it concerns the differences in average pay between men and women, regardless of their role. Equal pay relates to the difference in pay between men and women who carry out the same or similar roles.
Key Points about Gender Pay Gap Reporting
After recent changes to the Equality Act 2010, the government has released some draft regulations. These require private and voluntary sector firms, with 250 or more employees, to disclose the details of their gender pay gap publicly.
These draft regulations are expected to come into force on 6 April 2017. They will make it mandatory for firms to publish their gender pay gap data to their website. They will also have to submit evidence of compliance to the government. The details should be based on a snapshot of data taken on 5 April 2017.
Following the snapshot date organisations will have 12 months to release the data, based on the deadline of 4 April 2018. It must be displayed for 3 years to show whether progress has been made.
What should be included in the gender pay gap information?
Under the draft regulations, employers will be required to publish:
- The difference in mean pay between male and female employees during the pay period falling on 5 April 2017;
- The difference in median (i.e. mid-point) pay between male and female employees during the pay period falling on 5 April 2017;
- The difference in mean (i.e. average) bonus pay between male and female employees during the 12 months preceding 5 April 2017;
- The proportion of male and female employees who received bonus pay during the period of 12 months preceding 5 April 2017;
- The number of male and female employees employed on 5 April 2017 in quartile pay bands, A, B, C and D.
The pay information above must be based on data from a snapshot date of 5 April every year, from 2017 onwards. The bonus information must be based on the preceding 12 month period, beginning with the 12 months leading up to 5 April 2017.
The term ‘pay’ includes:
- Basic pay;
- Paid leave;
- Maternity pay;
- Sick pay;
- Area allowances;
- Shift premium pay;
- Bonus pay;
- Other pay e.g. car allowances paid through payroll, on call and standby allowances, clothing, first aid or fire warden allowances, etc.
The term ‘pay’ does not include:
- Pay for a different period;
- Benefits in kind;
- Arrears of pay;
- Overtime pay;
- The value of salary sacrifice schemes;
- Redundancy pay;
- Tax credits.
What does this mean for companies in a group structure?
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 define a “relevant employer” as “an employer who has 250 or more employees.”
For group companies, the employee headcount relates only to the legal entity that is an individual’s employer, rather than a collective headcount of all employees from different companies within a group.
What can employers do to prepare for the Gender Pay Gap Reporting requirements?
Employers can now take preparatory steps to ensure that they have the appropriate systems in place to collect Gender Pay Gap information.
Additionally, employers could also consider methods to put themselves in a favourable position and minimise any risks associated with their information being published. Employers could:
- Determine whether the regulations are likely to apply to the employer;
- Decide who will be responsible for collating, analysing and producing the gender pay gap data;
- Assess the payroll systems and work out what gender pay information can be produced;
- Review how pay and rewards are determined to ensure decisions are transparent;
- Make reasonable adjustments to your current systems (if necessary) to ensure compliance with the new regulations.
This blog has been written by one of our Legal Apprentices, Jack Kelly.