The Equality Act (Gender Pay Gap Information) Regulations 2017 (the Regulations) came into force in April 2017, with qualifying organisations (private and voluntary sector organisations that had more than 250 employees) being required to complete their first gender pay report by 30 April 2017 and publish this report by 30 April 2018. Thereafter, organisations must submit an annual report on 30 April each year.
Gender Pay Gap Reporting
Who do the Regulations apply to?
The Regulations impose a duty on employers in the private and voluntary sectors with at least 250 employees (not workers, sub-contractors and LLP members) to report information on any gender pay gap.
What does the employer need to publish?
Under the Regulations, employers will be required to publish the following information:
- The percentage difference in mean pay for men and women, excluding bonus payments;
- The percentage difference in median pay for men and women, excluding bonus payments, in order to ensure that those who have an unusually large salary for the organisation do not ‘skew’ the pay gap figure;
- The percentage difference in the average bonuses paid to men and women. This includes commission, long-term incentive plans and schemes, and the cash equivalent of shares paid;
- The proportion of men and women who receive bonuses. This means that employers cannot ‘get away’ with paying many small bonuses to many male employees and 1 large bonus to one female employee in order to give a similar average payment; and
- The gender pay split breakdown between quartile bands. Employers will be required to report the actual number of male and female employees in each of the four pay bands, rather than expressing this as a percentage difference between the genders. This will illustrate the extent to which women are in lower paid jobs.
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Equal Pay Claims
Under the Equality Act 2010, male and female employees are entitled to the same pay for “like work”, “work rated as equivalent” and “work of equal value”. This can mean the same pay for the same job but also the same pay for different jobs where the work is adjudged to be of the same value.
Historically, equal pay claims have focussed on the public sector where job evaluation schemes provided employees and their representatives with the data needed to evidence their claims. Recently, there have been significant claims lodged in the private sector too, most notoriously focusing on Asda.
For all private and voluntary sector employees, publishing gender pay information to the workforce and the wider public could lead to a significant increase in the number of equal pay claims as employees will have ready access to the data needed to substantiate their suspicions of unequal or unfair pay.
Where, when and how should employers publish the information?
Employers will be required to publish their full pay report annually on 30 April on the employer’s website, signed by a director or an appropriate person. This must be a ‘searchable’ website and accessible to the public and employees. No definition of ‘searchable’ is provided in the Regulations and it is thought that case law clarification will follow. This full pay report must be on the website for three years.
Employers must also upload the report to a Government website and the Government has discussed plans to publish league tables, naming the ‘best and worst’ sectors in terms of gender pay gap.
Non-compliance with the Regulations
There are currently no penalties for non-compliance with the Regulations; however the Government has stated that both civil and criminal penalties will be reviewed within three years of the Regulations coming into force.
It is also highly likely that the media and many Union groups will target those organisations which do not publish gender pay gap reports, particularly those in the public eye as well as those organisations whose published results do not reflect well on them. This will inevitably damage the reputation of the organisation and should not be taken lightly.
Further, the Government has suggested ‘naming and shaming’ those organisations that refuse to publish their annual gender pay gap report.
How Nelsons Can Help
- Our HR team have experience of conducting equal pay audits and analysing the data produced. They can assist you with an early equal pay audit to gather information about what your employees are paid.
- We can also assist you in determining which groups of employees are doing ‘equal work’ and identifying and determining the causes of any pay gaps.
- Our analysis will cover whether you can defend your position on grounds of non-discriminatory reasons for variations in pay such as pay progression, performance and competency pay, premiums and allowances.
- We can help you develop an equal pay action plan to resolve any issues before you are obliged to report your data as well as developing a communications plan to explain any gender pay gap figures in order to avoid negative media attention.
- Our Employment team have experience in dealing with equal pay grievances and claims to support you should any issues arise from publishing your gender pay information.
For more employment law advice or to comment on this article, contact us to speak to a member of our employment law team.