Mind the gap: Gender Pay Gap reporting
Wed 15 Feb 2017
The Gender Pay Gap regulations (‘Regulations’) will come into force from 6 April 2017. Although employers will have 12 months from then to publish their first gender pay gap (‘GPG’) report, the Regulations and the obligations they impose are complex – so, employers should start planning now.
GPG reporting is only triggered for private sector companies with 250 or more employees, on 5 April in each year. If triggered, the Regulations impose five, annual publishing obligations:
1. The overall mean and median gender pay gap, based on hourly pay.
2. The proportion of men and women in each of the four quartiles of the employer’s pay range, across the organisation.
3. The difference between mean and median bonus pay for men and women over the 12 month period.
4. The proportion of men and women who received a bonus during the same 12 month period.
5. A written statement confirming the accuracy of the published information, signed by a senior individual.
In addition, employers are encouraged (but not obliged) to provide a narrative explaining any pay gaps and setting out what action they intend to take in respect of the same. Our view is that employers should prepare their reports early, to allow plenty of time to analyse the results and to write a narrative setting the results in context. This also provides an opportunity to send a positive message about the employer’s future plans, transparency and the importance they place on equality and diversity.
The Regulations are not simple and producing the report will inevitably be a long and iterative process. It is also likely that in the event of any future disputes (such as equal pay or discrimination claims), employees will seek disclosure not only of final reports but also of interim drafts and working papers. So, there is potentially a real advantage to employers in involving their legal advisers at an early stage, to prepare GPG reports within a ‘legally privileged’ environment – until the data is clear, and can be accurately presented.
Employers will also need to start work now to (amongst other things) assess: which ‘employees’ are within scope for the purposes of the Regulations; what is included within ‘pay’ (for example, it will include bonus and commission payments but will exclude many benefits); how to calculate ‘hourly pay’; and how ‘quartiles’ are established; and then to extract the relevant raw data.
There will also, certainly be complicating factors, such as how employers deal with discrepancies that may arise from: part-time workers and new joiners; those on family-related leave or sabbaticals; role differentials; and any historical anomalies.
In summary, employers should set up a working group now (if they have not done so already), to get familiar with the new obligations and to start to plan a ‘dry run’ - possibly working with a template report on a legally privileged basis. The report will no doubt be an evolving document.
The earlier the core report is complete, the more time employers will have to draft a relevant, explanatory narrative to put the result into context and to send the right message to the outside world.