Worldwide: Cross-Border Trends: UK To Follow US Attack On The Gender Pay Gap

Following months of waiting the UK Government has finally published its draft regulations on the new "gender pay gap reporting" requirements in the UK. On publication of the draft regulations, the UK Government has asked one final consultation question: "What, if any, modifications should be made to these draft regulations?" – And so it would appear that the draft regulations are nearing but possibly not quite in final form, pending any pertinent responses received.

So what do the draft regulations say? The "Equality Act 2010 (Gender Pay Gap Information) Regulations (the Regulations)" will require employers (both public and private sector) with 250 or more employees to produce certain statistics and information regarding the gender pay gap of their workforce on an annual basis. The aim of the Regulations is clear: we have a gender pay gap in the UK, voluntary reporting hasn't worked (take up by the private sector was virtually non-existent), and this is a hot topic that the press, the public and the politicians all care about.

For the Regulations to bite, an employer must have 250 or more "relevant employees", i.e. employees who (i) ordinarily work in Great Britain, and (ii) whose contract of employment is governed by UK legislation. They must have this number of employees on the "relevant date" – which is set to be April 30th, 2017, and each April 30th thereafter. Figures will not be aggregated across associated employers within a group. Most of the information required to be published will relate to a specific "pay period" – the pay period within which the "relevant date" falls. For example, if employees are paid on the 27th day of each month, the relevant date (April 30th) will fall within the pay period from April 28th – May 27th and it is this snapshot in which the UK Government is interested.

If an employer has 250 relevant employees, on the relevant date, it then has until April 30th the following year (i.e. April 30th, 2018 in the first instance) to produce certain specified information about its employees and their pay:

  1. It must publish the difference in mean pay between male and female relevant employees in the pay period;
  2. It must publish the difference in median pay between male and female relevant employees in the pay period;
  3. It must publish the difference in mean bonus pay, for the 12 month period up to the relevant date;
  4. It must publish the proportion of male and female relevant employees who received a bonus during that period; and
  5. It must publish the number of male and female relevant employees on the relevant date split into quartile pay bands.

By way of an example for point 5, where an employer has 1,000 employees, it would produce a table along the lines of the following example:

Quartile Number of Women Number of Men
A – highest pay band 50 200
B – second highest pay band 100 150
C – third highest pay band 150 100
D – lowest pay band 200 50

With the exception of point 5 above, information must be expressed as a percentage. For example, for points 1 and 2 the employer might say that there was a "10% difference in mean pay but a 20% difference in median pay, between male and female relevant employees in the pay period."

What does and does not count as "pay" is set out in the draft Regulations. For example, pay does include maternity pay and shift premiums, but does not include overtime. There is also a detailed explanation of what is included in "bonus pay". It seems likely that there will be elements of pay that have not previously been considered, and we might see some amendments to the draft Regulations on this basis.

There is no requirement to publish explanatory notes to the information, and there are also currently set to be no penalties in place for non-compliance. However, it seems likely that the court of public opinion and campaign groups will be active in this area, and the UK Government also intends to publish sectoral "league tables" of the best and worst gender pay gaps of the information it receives, and that's one league table no employer wants to be top of.

They may have been a long time coming but subject to any final changes, the draft Regulations are now here and set to be introduced in October this year, and so we recommend that UK employers stay one step ahead by thinking now about how to gather, produce and explain (if necessary) these statistics. It may be worth having a "trial run" and collating some current statistics to see how the results would fare, in advance of having to disclose that information publicly. This way, the employer would have an opportunity to consider whether the statistics show any form of gender pay gap, what they might do to combat this before the first reporting requirement and/or how they are going to explain that gap to minimize publicity damage when the time comes. In that last respect, employers should be thinking about both internal and external communications and reactions – managing the message to the market, recruitment pools and clients, as well as to the existing workforce who might be destabilized by the pay gap information or, more cynically, could seek to use it to their advantage.

Looking over to the other side of the pond, the UK's proposed regulation comes at a time when both the US federal government and individual states are proposing and passing more aggressive equal pay laws than ever. On January 29th, 2016, the Equal Employment Opportunity Commission ("EEOC") published a proposed rule revising the Employer Information Report (EEO-1), which already collects employee data on race, ethnicity and sex, to require employers with more than 100 employees to also submit compensation data annually. The EEOC intends to collect from employers aggregate W-2 data organized within 12 pay bands for the existing 10 EEO-1 job categories. The proposed rule also calls for employers to report the number of employees, and the total number of hours worked, within each pay band. As we reported in an earlier blog on February 2nd, 2016, the EEOC expects the new data to provide the EEOC "with insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination." Unlike the UK rule, the EEOC's proposed rule will not require US employers to publish their own pay data. Rather, the EEOC plans to publish aggregated data (likely by industry and geographic area), and expects employers to use the published data to analyze their own pay practices to facilitate voluntary compliance.

At the same time, several US states, including California, New York, and, most recently, New Jersey have passed or proposed equal pay laws that significantly increase the burdens on employers to justify any pay differentials between men and women. The California Fair Pay Act, which became effective January 1st, 2016, changes the requirement that employers provide "equal pay for equal work" (which is also the standard under the federal Equal Pay Act) to "equal pay for substantially similar work" based on the employee's skill, effort and responsibility, and similar working conditions. Although employers may justify pay differences based on one or more of four factors, including "a bona fide factor other than sex," the Act requires employers to demonstrate that each factor relied upon is reasonably applied, and accounts for the entire wage difference. New York's Equal Pay Law, which took effect on January 19th, 2016, does not go as far as the California Act (the standard in New York remains "equal pay for equal work"), but significantly increases the burden on New York employers to justify gender-based pay differentials. Most recently, an equal pay law similar to the California Fair Pay is making its way through the New Jersey legislature, and is expected to become law unless vetoed by New Jersey Governor Chris Christie. All three of these state laws also include enhanced anti-retaliation provisions intended to improve pay transparency about employees' salaries1.

Undoubtedly, differences exist between the UK and US regulations and statutes. Nevertheless, they demonstrate a renewed emphasis on closing “the pay gap” across two continents, and both UK and US employers are advised to get ahead of the curve by analyzing their pay data and practices now.

Footnote

1 For more information on the California Fair Pay Act, see our October 20th, 2015 blog here. For more information on the New York Equal Pay Law, see our October 26th, 2015 blog here.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.