UK: Gender Pay Gap Reporting – Is Your Organisation Prepared?

Last Updated: 7 March 2017
Article by Kathryn Clapp

Back in July 2015, the then Prime Minister, David Cameron, announced that the government would "end the gender pay gap in a generation". Nearly two years later, and after various reports and consultations the requirement for businesses to report on their gender pay gap is due to come into force on 6 April 2017 under The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 ("Regulations"). The Regulations are accompanied by ACAS and GEO guidance.

Following our article in Law at Work on this issue last year, in this briefing we outline the key features of the new obligation on private employers in England, Wales and Scotland (but not Northern Ireland) with 250 or more employees to report on their gender pay gap between male and female employees and suggest ways in which they can prepare for the new reporting requirements. The Government has published similar reporting obligations for public sector employers which will come into force on 31 March 2017. The main differences between the two sets of regulations are that the public sector duty takes effect as part of the existing public-sector equality duty, rather than as a standalone requirement and the 'snapshot' date, on which certain pay information will focus, is 5 April for private sector employers but 31 March for public sector employers.

Key points of the Regulations are that:

  • they will apply to private and voluntary sector employers with 250 or more employees on a "snapshot date" which is 5 April in each year (starting with 5 April 2017)
  • publication of the first set of gender pay gap statistics must be by 4 April 2018 and annually thereafter
  • employers will be required to provide information on the mean and median gender pay gap and mean and median gender bonus gap, together with the proportion of men and women in receipt of a bonus; and proportion of men and women in each of four pay quartiles
  • the gender pay gap is based on the difference in the gross hourly rate of pay of male and female "full-pay" employees for the pay period that includes the 'snapshot date' of 5 April 2017. The bonus pay gap relates to bonus payments made between 6 April 2016 and 5 April 2017. "Full-pay" relevant employees are those not on a reduced pay rate or nil pay during the snapshot period
  • "employees" include workers but not partners, including those in an LLP
  • there is no express territorial limit to the location of where employees' work

Guidance

ACAS and the GEO recently published guidance "Managing gender pay reporting in the private and voluntary sectors" (Guidance) found here together with other guides and factsheets on "Key Obligations", "Top 10 Myths" and a template Employee Communication form. The Guidance assists with understanding the Regulations and what ACAS considers "to be good employment practice".

Employers and employees

Each employing entity has a separate obligation to report within a group, based on the number of employees of that entity (rather than the group as a whole).

"Employees" for whom data must be provided include those with employment under a contract of employment, a contract of apprenticeship, and a contract personally to do work, which potentially covers many self-employed workers who are engaged directly by employers as consultants, or independent contractors. As a result, many more employers are likely to come within scope as these workers will count towards the 250-employee threshold. However an employer is not required to include data relating to an employee who is employed under a contract personally to do work if the employer does not have the data and it is not reasonably practicable to obtain it, as may be the case with independent contractors who do not work fixed hours and are not paid through the payroll. Partners, including partners in an LLP, are excluded from the definition of relevant employee so there is no need to provide pay or bonus data for them.

Overseas workers

Although the Regulations make no express reference to the status of any employees working overseas the Guidance states that an employer based in Great Britain who sends employees to work abroad may find that they do need to be counted for gender pay reporting obligations. The Guidance cites relevant indications include having a contract subject to GB legislation, continuing to have their home in GB and UK tax legislation applying to their employment.

Only "full-pay" relevant employees should be included in calculating mean and median hourly pay rates. This excludes employees on a reduced pay rate or nil pay during the snapshot period due to being on annual leave, maternity, paternity, adoption, parental or shared parental leave, sick leave or special leave. Employees on leave are also excluded from the quartiles information but are not excluded from the calculation of mean and median bonus or proportions of employees paid a bonus.

Pay

Pay is gross pay calculated before deductions at source and will include basic pay, paid leave, allowances, shift premium pay, pay for piecework and any portion of a bonus payment that is proportionate to the relevant pay period. Pay will not include overtime pay, expenses, benefits in kind, redundancy or other termination pay or payment in lieu of leave. The Guidance states that the amount of an employee's ordinary pay and bonus pay must be calculated before deductions are made at "source" i.e. before the deduction of employee pension contributions.

Calculating the "hourly rate of pay"

Pay is calculated over an employee's normal working hours or an average over a 12 week period if the employee has no normal working hours. The Guidance also sets out how to extract the essential information and provides examples of how to calculate weekly working hours for employees with a fixed hourly rate of pay, variable hours contract, piecework and on-call and sleeping-in arrangements.

Bonus pay

The relevant period for bonus pay reporting is the 12 month period ending on the snapshot date. So for the first gender pay gap report to be published by 4 April 2018, employers will need to take account of bonuses paid between 6 April 2016 and 5 April 2017 to all relevant employees (not just full pay relevant employees).Therefore employees who have taken maternity leave are included, even though their bonus is likely to have been less as a result. The Guidance also makes clear that bonuses are included in the calculations if they have been received within the period, regardless of the period to which the bonus was attributed. Securities, securities options and interests in securities are included within the definition of bonus and the Guidance explains how to value bonuses paid in securities.

The duty to publish annual information relating to pay

Employers who are caught by the regulations will need to publish:

  • the difference in the mean and median pay of male and female employees;
  • the difference in mean and median bonus pay of male and female employees;
  • the proportions of male and female employees in the workforce who were paid a bonus in the previous year; and
  • the numbers of male and female employees employed in quartile pay bands calculated by dividing the workforce into four equal sized groups that are organised according to the hourly pay rate.

Publication of the first report

As an employer must report the pay data within 12 months beginning with the snapshot date, the first set of gender pay gap statistics needs to be reported by 4 April 2018. The report must be accompanied by a written statement confirming that the information is accurate and signed by a director or LLP member. The pay data and statement must be published on the employer's website, be available to the public and remain accessible for at least three years.

The Guidance suggests that employers should also use the statement to add a supporting narrative to help anyone reading the statement "to understand the organisation's view of why a gender pay gap is present and what the organisation intends to do to close it". It also suggests that a narrative should be used where measures to reduce the gender pay gap have already been taken which need time to take effect before an impact is made e.g. review of staff bonus schemes, recruitment processes and career development opportunities. A narrative can then also report on where the gender pay gap has successfully reduced over time.

The Guidance suggests that by publishing earlier in the year employers can been seen as leaders in their sector and gain from brand and reputation enhancement, are working with fresh data, unanticipated issues or complications can be tackled earlier on and earlier action is possible to tackle any pay gaps identified.

Enforcement

No civil penalties are proposed in the Regulations although the Equality and Human Rights Commission could take enforcement action for non-compliance. In reality it will be for employers to recognise that the potential reputational risk of non-compliance with the new gender pay gap reporting regime provides sufficient incentive to provide the data. As the Guidance states, "developing a reputation for being a fair and progressive employer, attracting a wider pool of potential recruits for vacancies and the enhanced productivity that can come from a workforce that feels valued and engaged..".

In the meantime the government has produced a new online tool that uses the Office of National Statistics survey data to show the gender gap according to different professions. The national average gender pay gap is now at a record low of 18.1 per cent, but the average masks significant disparities according to profession.

What can employers do to prepare?

  • consider whether the employer is in scope with 250 more employees on 5 April 2017
  • if the employer is part of a group of companies, multiple entities may need to comply
  • consider the identity of the "relevant employees" (which include workers) and whether they are "full-pay relevant employees"
  • ensure that the relevant Boards of Directors are fully aware of the requirements together with PR and HR teams so that the legal and supporting external communications are considered
  • ensure that payroll and HR generate figures prior to the finalised report and consider any voluntary additional narrative to put any gender pay gap into context
  • consider any relevant training for managers in relation to decisions on bonus, salary review, appraisals
  • consider an internal communications strategy for the existing workforce in advance of any published report (see template communication in the Guidance)
  • consider whether a review is required within the organisation should disparities arise, and view within the context of other similar organisations using the government's online tool

Guidance: Considerations by employers to implement plans to manage the gender pay gap

Although this is not a legal requirement, the Guidance lists examples of the benefits to business initiating an action plan that aims to reduce the gender pay gap in their workplace. These include assisting a business in monitoring pay, bonus and career progression among staff, being of use to potential candidates, clients and customers and providing a positive message in subsequent gender pay report statements. Suggestions to show employers have effective gender monitoring in place include developing the evidence base, ensuring related policies and practices are up to date, training and supporting line managers, minimising any negative impact from pay systems and considering taking positive action.

And it may be worthwhile for those individuals within an organisation tasked with preparing the report and commenting on its results to have to hand the ACAS/GEO sheet on "Top 10 Myths: Gender pay gap reporting" (available here). This includes the myth that there's no business advantage to gender pay gap reporting. The countering fact is a statistic from global consultancy McKinsey estimating that bridging the UK gender gap in work has the potential to create an extra £150 billion on top of 2025 business-as-usual GDP forecasts.

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
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 you may opt out by clicking here

    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.

    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.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    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.

    By clicking Register you state you have read and agree to our Terms and Conditions