Draft guidance published on Gender Pay Gap reporting
Acas and the Government Equalities Office have published draft guidance aimed at helping employers to comply with the new Gender Pay Gap reporting obligations coming into force on 6th April 2017.
Who is caught?
An employer must comply with the regulations for any year where they have a headcount of 250 or more 'relevant employees' on 5th April.
Looking at this in a bit more detail:
- 'relevant' means those who are employed on 5th April, no matter what length of time they have been employed for.
- 'employee' under the regulations could also capture consultants if they are under "….a contract personally to do work…"
- an employer means the employer itself, rather than the headcount of all the employees from a number of companies within the same group.
Although there is no legal obligation to do so, the guidance encourages employers under this threshold to give serious consideration to the business benefits of publishing gender pay gap information.
What must be published?
Employers must calculate and publish the:
- overall gender pay gap for relevant employees, calculated using both mean and median average hourly pay;
- difference between men and women's mean and median bonus pay, calculated over a twelve month period;
- proportion of male and female employees who received a bonus payment in the same twelve month period; and
- proportion of male and female employees in each quartile pay band.
Calculations for the hourly pay gap metrics are to be based on the 'snapshot date' of 5th April. The regulations and guidance both provide detailed instructions on how to calculate the required statistics.
Employers must also publish a written statement, signed by an appropriate senior person in the business, confirming the accuracy of their calculations.
The guidance states that employers can include an optional narrative explaining why a gender pay gap exists and what action they intend to take to eliminate the gap.
When must it be published?
Employers will need to take the first data snapshot on 5th April 2017, and must publish the data by no later than 4th April 2018 (and annually thereafter). The guidance encourages employers to publish their results as soon as possible after April.
Where to publish?
The data and statement must be published on the employer's website and on a designated government website, details of which will be provided closer to 5th April 2017.
The information must be retained online for a minimum of 3 years.
Failure to comply
Failure to publish gender pay reports within one year of the snapshot date is unlawful, although the guidance does not impose civil penalties for non-compliance.
Since the guidance was published, the Equality and Human Rights Commission ("ECHR") has accepted the government's view that non-compliance with the regulations constitutes an 'unlawful act' under the Equality Act 2006, which means that the ECHR can take enforcement action.
The guidance also emphasises the reputational risk of failing to publish gender pay gap information.
The guidance encourages employers to go beyond the requirements of the regulations to implement plans to reduce the gender pay gap in their workforce, noting the various benefits – for example, helping employers to recruit the best possible people – that an action plan can bring. To ensure actions are implemented, any action plan should be handled by committed and sufficiently senior management.
As the first snapshot date is fast approaching, employers must ensure that their HR and payroll systems are up-to-date and able to extract the relevant data.
You can access the guidance here.