One of the most publicised employment related issues for 2016 is undoubtedly the proposed requirement for large employers to publish information showing the pay of male and female employees in their organisation.
The government response to the gender pay reporting consultation is expected this winter; draft regulations early next year; and the new rules are expected to be in force for companies with at least 250 employees by March 2016. It is likely, however, that this will just be the start of a phased implementation which will, in time, affect smaller employers.
What do you need to do now?
Gender pay reporting is worth getting ahead of now, particularly if you employ at least 250 employees.
To get ahead, start thinking about how you would audit your pay practices. Firstly ask yourself whether you will be able to gather together the relevant figures.
Then work through the following processes;
- Identify where men and women are doing "equal work", which means work which is broadly similar or is of equal value in terms of the demands of the role
- Identify any pay gaps between male and female pay
- Look at variables such as part-time status, location and seniority
- Start to think of the narrative that you might want to sit alongside your gender pay figures to put them into context, or to find potential justifications
- What steps can you take to address any imbalance?
Before embarking on this process, however, you need to think carefully about the risk of creating evidence that could be used against you in an equal pay or discrimination claim, as well as the relevant data protection and confidentiality issues. If you are concerned, speak to Charles Urquhart to explore the best approach for your business.
What impact will gender pay reporting have?
It is not clear whether the rules will include enforcement provisions. However, the rules are an example of new regulation which aims to drive change through public pressure: in effect, "naming and shaming". Although publishing gender pay information may lead to more equal pay and sex discrimination claims being brought, what is most significant for businesses is undoubtedly the risk of reputational damage arising from negative publicity over gender pay gap issues.
The drive for gender equality at work is very unlikely to go away. As such, employers may want to use the developing regulatory need to be an ethical employer as an opportunity to enhance their corporate reputation. For example, employers can use this to get ahead of the competition by becoming an organisation that leads the industry in good practice in employment and that presents a positive image to customers and the community. It will also give the company a competitive advantage in the recruitment and retention of the best staff.
What will you have to report?
The consultation, which closed in September 2015, asked for views on the information organisations will have to publish, and how. The options listed in the consultation were to break down the gender pay gap figures by job type or grade, or by full-time and part-time employees. It remains to be seen whether these or other variables, such as the employees' location, will be taken into account. If not, and only a single pay gap figure is required, the risk is that this may provide a distorted view of pay practices.
Although it was announced at the end of October that bonus payment figures will need to be reported, it is not clear if the bonus element will be rolled up with other earnings or if there will be separate bonus statistics. This will be significant for many employers because, unlike base salaries which are typically transparent and operate within some form of banding system, there is often little or no transparency in bonus payments (so often seen to be a rather dark art) so gender bias can creep in.
It is not yet clear how frequently gender pay gap information will have to be published. The rules may mirror the publication frequency of gender pay regimes in Austria and Finland, which require the information to be submitted every two years, or in Sweden where it is every three years.
Finally...
The consultation also raised the issue of challenging workplace cultures that have historically favoured men, and of unconscious bias training for recruiters and line managers. The government also asked for comments on how young girls can be encouraged to consider the broadest range of careers and how women can be given greater support to return to work and progress in their career after having children. It is therefore clear that the drive for gender equality extends far beyond pure gender pay reporting.
Key dates
Expected this winter - the government response
to the consultation
Early 2016 - draft regulations
March 2016 - new rules expected to be in force for
companies with at least 250 employees
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.