Jane Fielding, Head of Employment, Labour & Equalities talks to Louise Clifford about the fast approaching new Gender Pay Gap Reporting regime.
Jane Fielding: So gender pay gap reporting Louise, this is the latest Government initiative to try and tackle the very stubborn gender pay gap that we have had for years and still have. Do all employers need to worry about this?
Louise Clifford: No, at the moment it's just larger employers. So the threshold is going to be 250 or more employees, but the thing for employers to remember is that 'employees' is given a fairly broad definition. So rather than the narrow category of people who have a contract of employment it is the broader category which includes workers and apprentices and so on, which we see in the equalities legislation. The regulations also cover all private, voluntary or public sector employers. There are separate rules applicable to the public sector and the private sector but essentially they largely mirror each other.
Jane: And the reporting, the 250 employees that you measure by, is that by employing entity or is that a reporting across a group? How does that work?
Louise: It's clear now under the revised rules that the reporting obligations apply to each individual employer within a group. So it is possible within a large group structure that you may have some employers that are required to report because they meet the threshold and others that are not. It is open to employers in a broad group structure to report voluntarily on the statistics of the group as a whole, but that would be a voluntary additional step for the group to take rather than something that is required by the rules.
Jane: What do employers actually have to report on? What are the obligations in terms of what the report has to cover?
Louise: There are three key elements to this. So the first is that employers have to report on the average differences in pay between men and women and that is measured on hourly rates of pay rather than on overall salaries. The second requirement is to provide information about the average difference in bonus pay to men and women and that is measured over a slightly different period, you have to look back over a 12-month period to work out those statistics. You also need to report on the proportions of men and women who actually receive bonuses. There is then a third category which requires employers to report on the proportions of men and women in each pay quartile and that essentially is each 25% group of employees when they are listed in terms of hourly rate of pay.
Jane: And is there a particular point in time that you have to report on or can you pick the date?
Louise: No, that is set. So essentially there is a snapshot date which is 5 April for private sector employers and it will be 31 March for the public sector and essentially the snapshot date is important for two reasons. First of all it is the date on which you need to assess the number of employees in your organisation and whether you meet the threshold but it also is the date which dictates which pay period you use for the collection of data. So the pay period within which your snapshot date falls will be the period in respect of which you have got to report the statistics.
Jane: And is there a time limit for delivering that report?
Louise: Yes, there is a 12-month time limit. So essentially the 12 month starts to run on the snapshot date, the first of which will be March or April this year depending on whether you are public or private sector and then employers have 12 months to report. So the reporting deadline for the private sector would be 4 April 2018, and each year thereafter, and for the public sector it will be 30 March.
Jane: And in the original draft regs I think there was quite a lot of confusion wasn't there over the definition of bonus and when those had to be taken into account and how you calculated them. Has that been clarified in the final version of the regs?
Louise: It has largely. Yes there were lots of concerns particularly around how you dealt with things like share option schemes and equities generally. What the new rules effectively have done is to align the rules more closely with the tax legislation so employees will now be treated as having received payment when the bonus gives rise to a taxable charge so it aligns better with existing scheme structures.
Jane: So if employers are thinking actually they have got a gender pay gap that they do not really want to report on, what are the risks of deciding either not to report or not to report as fully as the regulations would suggest.
Louise: There are no specific civil or criminal penalties in either the public or private sector rules. That said there is a section in the explanatory notes in the private sector rules which essentially says that a failure to comply will be treated as an unlawful act which will effectively empower the Equality and Human Rights Commission to take action, enforcement action which could involve things like investigations and requirements to produce action plans. There is not a similar provision in the public sector rules but with the public sector there is a broader public sector equality duty so failure to comply with the obligations is likely to constitute a failure to comply with that broader public sector equality duty. I think the broader issue for employers though is going to be that a failure to report, because reports have got to be published on both the employer's own website and a Government dedicated portal, will be visible to both internally and to the world at large so there are going to be concerns there about negative publicity from a failure to report.
Jane: So what should employers be doing now, because obviously that snapshot date, whether it is March or April this year, is not that far away now? What can employers do to plan ahead?
Louise: Well some employers are starting to do dummy runs both so they can kind of check that the systems are effectively capable of collating the data in the way it needs to be collated and that the systems work effectively in order to produce the reports. Employers will also be wanting to potentially investigate the causes of any discrepancies so they are kind of forearmed when it comes to reporting. What we are seeing is employers are basically pulling together kind of cross organisation groups of people to work on this because it is going to involve lots of different disciplines; you have got payroll, finance, HR, legal, lots of people that need to effectively be involved in this. The other point to flag is that in the private sector there is a requirement for a senior officer to sign off on the final results so it needs to have senior buy-in from the outset.
Jane: And what if an employer is worried that the information that is flushed out by that dummy run might expose them to equal pay claims. Is that a concern?
Louise: It is a potential concern and it is not necessarily the case that having a gender pay gap means there are equal pay issues within an organisation. That said, if you do not know what is causing your gender pay gap in your organisation you will be mindful of potential equal pay consequences and one of the ways to deal with that is to obtain legal support either internally or externally to maintain privilege over your results as you are collating the data.
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