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How to deal with gender pay gap reporting

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From April 2017, private sector firms with more than 250 staff will be required by law to calculate and report on the gender pay gap within their organisation. The Employment team

explains the changes and what businesses need to do to comply.

What’s the difference between the gender pay gap and equal pay?

It’s important to remember that the gender pay gap differs from equal pay as it is concerned with the differences in the average pay between men and women over a period of time, no matter what their role is. Equal pay, however, deals with the pay differences between men and women who carry out the same or similar jobs.

What does my business need to report on?

The reporting regime only applies to private sector employers with 250 or more employees. Employers must publish the mean and median hourly pay gap between men and women, based on the pay period containing a specific date in April each year (the “snapshot date”).

Employers must report the annual bonus gap between men and women, again using a specific date in April, along with the proportion of male and female employees who received a bonus that year.

There is an additional obligation to publish the numbers of men and women in each of the four quartile bands. The first calculation date is April 2017. The data must be published on the employer’s website by April 2018, remaining there for three years.

What are the main points I need to be aware of?

The Snapshot Date: This is the date from which employers are to collect pay data.  It has been changed from 30 April to 5 April, thus the last date for reporting the first set of gender pay gap statistics will be 4 April 2018.

Employee: It is now clear that the regulations use the broad definition of employee, from the Equality Act 2010. This is significant because it potentially covers many self-employed workers who are engaged directly by employers as, for example, consultants. Consequently, more employers are likely to come within the scope of the regulations as these workers will count towards the 250-employee threshold.

Pay: Only full pay relevant employees are included in calculating mean and median hourly pay rates. Therefore, employees on reduced pay during the snapshot period, for example, because of maternity leave, will not be included.

Bonus: Securities, securities options and interests in securities are included within this definition. Remuneration in the form of such securities, options and interests is to be treated as paid to the employee at the time, and in the amount that they give rise to taxable earnings or income.

Pay-Quartiles: The regulations clarify that this involves splitting the workforce into four equal-sized groups that are organised according to the hourly pay rate, from the lowest to the highest paid.

What format does the report need to be in?

Employers must prepare a written statement, to be published alongside the results. As a minimum, this statement must confirm that the published information is accurate and must be signed by an appropriate person.

On an annual basis the employer will need to publish the report on their own website as well as submit evidence of compliance to the Government. Employers will also be required to keep their gender pay figures online for three years in order to show the progress made.

How will it be enforced?

It is a legal requirement for all relevant employers to publish their gender pay report. Failing to do this within one year of the snapshot date is unlawful. The Equality and Human Rights Commission has the power to enforce any failure to comply with the regulations.

Employers will also run reputational risk if they fail to publish the information, and in many cases the suspicions behind why an employer failed to publish their gender pay gap could have a negative impact and be far worse than what the report would have shown.

What else do I need to know?

Producing the report will help to ensure communication to existing employees that as an employer you are committed to building a diverse and inclusive workplace, that gives equal opportunities to all employees irrespective of gender. In turn, a more valued workforce is likely to demonstrate greater productivity and reduce the costs associated with high staff turnover.

Gathering the information needed will be a challenge for many employers. It is therefore advisable to consider the new regulations as soon as possible, in order to ensure that the true gender pay position is captured.

Further, employers are advised to review and to update their policies to help address any gender pay gap issues. Relevant policies to review may be equality and inclusion, bullying and harassment and flexible working.

For more information on how gender pay gap reporting might affect your business, contact Harrison Drury’s Employment team, on 01772 258321.

Find out more about HR Compass, Harrison Drury’s specialist employment law product. HR Compass comprises three core components designed to offer seamless financial and business continuity protection for businesses. These include an employment law health check, expert fixed-fee employment law advice and an insurance policy to protect against the cost of employment claims.


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