Mandatory Gender Pay Gap Reporting

Posted on April 4, 2017 · Posted in Employee, Regulatory

On 12th February 2016, the Government Equalities Office published a Government Consultation Draft introducing mandatory gender pay gap reporting draft regulations. In January 2017, the Advisory, Conciliation and Arbitration Service (ACAS) published a guidance document to assist employers in their compliance efforts with the draft regulations.

The draft regulations were introduced in an effort to provide employers with the tools necessary to identify and reduce the pay gap between male and female employees in their workforce.

Employers are expected to begin their first data snapshot on 5th April 2017, and submit their first reports by 5th April 2018. Employers will be required to submit reports every year by 5th April thereafter.

Affected Employers

The draft regulations apply to private and voluntary large employers. The draft regulations define ‘large employer’ as an employer with at least 250 relevant employees. A ‘relevant employee’ is someone who ordinarily works in Great Britain and whose contract is governed by UK

legislation. This is a broad definition that includes full- and part-time workers.

Employers with fewer than 250 relevant workers are also invited to participate. In addition, the government is aiming to include the public sector, with their first data snapshot on 31st March 2017 and their first reports due by 30th March 2018.

Mandatory Gender Pay Gap Reporting

Reporting under the draft regulations will take place as a publication of employee payment data. Specifically, the draft regulations require employers to report the following:

  • The difference in mean bonus, mean pay and median pay during the pay period between male and female employees;
  • The proportion of male and female employees who received bonus pay during the 12 months preceding the relevant date (as a percentage of the total number of relevant male and female employees, respectively); and
  • The numbers of relevant male and female employees according to quartile pay bands.

Calculations

To comply with these requirements, employers will need to calculate their:

  1. Mean gender pay gap;
  2. Median gender pay gap;
  3. Mean bonus gender pay gap;
  4. Median bonus gender pay gap;
  5. Proportion of males and females receiving a bonus payment; and
  6. Proportion of males and females in each quartile band.

To make these calculations, employers will need to gather information regarding their employees’:

  • Basic pay;
  • Paid leave;
  • Maternity pay;
  • Sick pay;
  • Area allowances;
  • Shift premium pay; and
  • Bonus pay and other pay (including car allowances paid through the payroll, on call and standby allowances, and clothing, first-aider or fire warden allowances).

‘Pay’ does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay or tax credits. This definition of pay is consistent with the definition used by the Office of National Statistics (ONS) for the Annual Survey of Hours and Earnings (ASHE).

Additional Statements

In addition to the statistics discussed above, employers will also be required to include a written statement confirming that the information they submit is accurate.

Employers also have the option to include a narrative of their calculations to explain the reasons for their results and to provide details about what they are doing or plan to do to reduce the gender pay gap within their workforce.

Reporting Website

To comply with these draft regulations, affected employers will need to publish the information referenced above at least annually, by 5th April of each year.

The information will need to be published on two websites:

  • First, somewhere accessible within the employer’s own website; and
  • Second, on a designated government website. Details regarding the designated government website will be released to the public close to 5th April 2017.

The publication must be in English and must be accessible to the public. In order to monitor improvements, employers will be required to retain reported information on the website for at least three years.

Compliance Enforcement

Currently, the draft regulations do not propose enforcement penalties. However, the Government Equalities Office will closely monitor compliance with finalised regulations during the initial years of implementation.

In addition, the government is expected to publish a database of complying employers. This information will be available to the public through a government-sponsored website. The website is also expected to identify examples of compliance and non-compliance.