UK: Get Ready For Gender Pay Gap Reporting

Last Updated: 21 May 2018
Article by Jennifer Cashman

It is expected that draft legislation aimed at reducing the gender pay gap (“GPG”) will be initiated by the Government before the summer recess and will be far stronger than that recently enacted in the UK. If passed, the legislation will initially require employers with more than 250 employees to publish details of any  GPG. However, that threshold would fall to 150 workers two years later, and to 50 after a further 12 months.

Employers and HR practitioners need to start preparing for the reality of these new reporting obligations and all of the associated issues that will come with the new regime, such as publicity and brand management issues.

BACKGROUND

The GPG in Ireland is currently 13.9%. This can be contrasted against the EU average of 16.7%. The current Programme for Government includes commitments in respect of measures to reduce the GPG, inclusive of increasing investment in childcare, reviewing the lower pay of women, gender inequality for senior appointments and seeking to promote wage transparency by requiring companies of 50 or more to complete a wage survey.

In May 2017, a Private Members Bill, the Irish Human Rights and Equality Commission (Gender Pay Gap Reporting) Bill 2017, (“the Bill”), was initiated by the Labour Party. The Bill, if enacted, requires medium to large-sized companies (defined as those with more than 50 employees) to regularly publish wage transparency surveys that would highlight any difference in pay between their male and female employees. It also proposes fines of up to €5,000 for companies that do not comply with their obligations under the legislation.

Several actions targeting a reduction in the  GPG in Ireland, and giving effect to this commitment, are also included in the National Strategy for Women and Girls 2017-2020, launched on 3 May 2017.

On 9 August 2017, the Minister for Justice and Equality, Mr Charles Flanagan TD and the Minister of State with special responsibility for Equality, Immigration and Integration, Mr David Stanton TD, launched a public consultation on tackling the GPG. The consultation process concluded in October 2017 and the summary of the responses was published at a National Symposium, "Rising to the challenge - addressing Ireland's gender pay gap", on 10 January 2018.

At that symposium, David Stanton TD  affirmed the Government’s commitment to pursue the introduction of employer wage surveys and said that the indications from other countries which have introduced such measures is that publishing statistics related to the  GPG at company level can draw attention to any gender imbalances that exist, and encourage action at that level. He also confirmed that the Government is considering legislation that would see public and private firms employing more than 250 staff report on gaps in hourly, overtime and bonus rates.

UK EXPERIENCE

In the UK, as of 6 April 2017, only those employers with more than 250 employees are required to publish annual gender pay figures online. There are two sets of Regulations in the UK which impose the mandatory gender pay gap reporting obligations on employers – the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017, which apply to most Government departments, the armed forces, local authorities, NHS bodies and others, where the employer has 250 or more employees on the snapshot date 31st March of a given year, and the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which apply to all other private, voluntary and public sector employers who have 250 or more employees on the snapshot date of 5th April of a given year.  The Regulations have been described as a “game changer in terms of workplace culture and practices”.

Both sets of Regulations came into effect 5 April 2017, and organisations were required to publish their results on their website and upload them to a Government website by 4 April 2018. 

There are six different pieces of information that are required on the total workforce population under the Regulations:

PAY GAP, MEAN AND MEDIAN - This is the difference in hourly pay of male and female full-time relevant employees per April time period snapshot, expressed as a percentage of the hourly pay of male relevant employees. This means that a positive number indicates men earn more than women; a negative number will mean the reverse. Pay is reported as both ordinary pay and bonus pay.

BONUS PAY GAP, MEAN AND MEDIAN  - This refers to the bonus pay paid to male and female relevant employees during the 12 months prior to the snapshot date, expressed as a percentage of the bonus pay paid to male relevant employees.

BONUS PAY PROPORTION - Bonus pay proportion refers to male relevant employees who received a bonus in the 12 months, expressed as a percentage of the male relevant employees; female relevant employees who received a bonus in the 12 months, expressed as a percentage of the female relevant employees.

QUARTILES - Organise workforce into evenly sized quartiles based on ranking of all full-pay individuals from highest to lowest by hourly rate of pay. Report on each quartile the number of full-pay male and females in each quartile as a percentage of the total in the quartile.

Employers must publish within 12 months of the 5 April snapshot date each year. It must be published on the employer's own website and remain there for at least three years from the date of publication, in English and accessible to all its employees and the public. It must also be published on a ‘website designated by the Secretary of State’ with the name and job title of the person who signed the statement.

The publication must be accompanied by a written statement by the employer to confirm the information published is accurate. The statement must be signed by one of the following:

  • A director or equivalent
  • Designated member in an LLP
  • General partner in a limited partnership

Organisations are permitted to provide an accompanying narrative to support the  GPG figures; this should comprise a clear explanation of the causes based on detailed analysis and place the data in context. The narrative gives employers the opportunity to explain what their results show. Among them could be potential challenges in addressing the gap, highlighting successes brought about by recent activity and what plans are in place for the future to reduce the gap in the long-term.

More than 10,000 UK companies, including a number of Irish companies with a presence in the UK, have submitted details on wage transparency in 2018, in accordance with their new obligations under the Regulations, with the final figures indicating that 78 per cent of UK firms pay men more than women on average. Hundreds of UK companies will also now face legal action after failing to comply with their reporting obligations under the Regulations.

There has been lots of publicity arising from the  GPG reporting in the UK – with companies such as HSBC, Virgin Atlantic, Apple, Conde Nast, Ryanair and Barclays having the biggest reported GPGs.

IRELAND

It remains to be seen what form the final draft of the Irish legislation will take. However, whatever form it may take, what is clear is that the legislation is on its way so employers must commence preparations.

WHAT CAN EMPLOYERS DO TO PREPARE?

There are a number of steps that employers can take now in anticipation of the new GPG reporting regime, as follows:

  1. Involve the Appropriate Stakeholders –  GPG reporting will involve a number of key stakeholders in every business affected by the new regime.  Ensure that IT, Finance, Legal (internal and/or external legal advisors), HR and PR (internal or external) are involved in the initial meetings to discuss how the organisation will tackle these new reporting obligations.
  2. Understand the Legal Obligations –  Keep an eye on this area as it develops in Ireland over the coming months and take appropriate advice once the final form of the legislation becomes clear.
  3. Review Potential Issues before Publication –  It is important to try and understand, in advance of reporting, how your business will stand on the GPG once the reporting obligation kicks in. Now that the UK reporting obligation is up and running, there is a lot of information available to businesses here on how to report under the UK legislation.  Employers would be well advised to review that advice and apply it to their own business by way of a trial reporting run in advance of the Irish legislation being enacted. This will give businesses a good idea of where they stand on the GPG. www.acas.org.uk is a great place to start in this regard.
  4. Be Proactive –  If the trial reporting run reveals a GPG and associated issues, consideration will need to be given to how this can be addressed. Changing recruitment practices, talent development, remuneration changes and flexible working policies are all initiatives which should be considered.  Employees and their representatives should also be given the opportunity to provide input on action plans to tackle the GPG.
  5. Plan your PR and Communications Strategy –  If it becomes obvious that you may face negative publicity arising from a GPG, plan how you will address this.  Managing your messaging, internally and externally, will be very important to ensure that any potential brand damage is minimised. Employers are currently in a war for talent and any potential negative brand publicity can be very damaging for an organisation striving to attract top talent.

CONCLUSION

GPG reporting is an inevitability and employers ignore it at their peril. Act now and the benefits to your organisation of being proactive will be maximised.

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.

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