Out-Law Analysis 3 min. read

First 'snapshot' of gender pay gap due as reporting requirements come into force

ANALYSIS: Large UK employers will begin publishing their gender pay gaps over the coming months, based on the pay which their employees receive within the pay period in which today's date falls. 

If you employ 250 or people or more, then the payments you make to your employees in the payroll run within which today's date falls will form the basis of the gender pay data you will need to publish to comply with your obligations under the Gender Pay Gap Reporting Regulations. You have 12 months from today to report this data.

It is now too late for businesses employing 250 or more people to implement fixes and change their gender pay data for 2017 – the data is what it is. However, there is still time to develop and refine your reporting strategy. A critical aspect of this will be creating a narrative in order to contextualise the data and provide details of the positive initiatives you have underway to address any problem areas. These could include flexible working policies, mentoring and initiatives to improve female representation, particularly at senior levels. 

In a recent survey of UK businesses, 84% of respondents confirmed that they were planning to disclose additional narrative to support their gender pay data, and a large proportion also confirmed that they would be disclosing more detailed gender pay data than the regulations actually require. These figures show that businesses are not only aware of the potential reputational consequences of the gender pay gap reporting requirements, but are keen to comply with their new legal duties.

Employers will be going into these new requirements blind, and keen to ensure that their reporting strategy does not fall short of the statutory requirements and is in line with other businesses in their sector. Your legal advisers can review how you propose to carry out your gender pay calculations, including the formulas you will use, your assumptions and approach to ensure that the director who is signing your statement can be confident that the gaps have been calculated in accordance with the regulations.

The regulations will require you to calculate your overall mean and median pay gaps based on gross hourly pay for men and women, expressed as a percentage; as well as your mean and median gender bonus gaps. You will also be required to publish the proportion of male and female employees within each 'quartile' of your pay distribution, as well as the proportion of men and women that have been paid a bonus in the preceding 12-month period.

You will have to consider who to include in and exclude from the definition of employee, as well as what elements of pay you will include and exclude. The regulations define 'employee' as anyone in a contract of employment, a contract of apprenticeship or a contract personally to do work; and therefore potentially includes those with 'worker', rather than employee, status, and the self-employed. Acas has provided some guidance about what it is included in the definition of 'ordinary pay and allowances' and how certain bonuses should be dealt with, but questions remain, particularly if your business has a more complex remuneration structure in place.

Companies with a presence in Northern Ireland should be aware of the different timescales and requirements which will apply in respect of their Northern Irish workforce. The regulations are not due to come into force in Northern Ireland until June 2017. Given that there are no ministers in place in Northern Ireland at present the proposed enactment date could well slip.

Employers with employees in Northern Ireland must also report on statistics in relation to ethnicity and disability and there is a fine of up to £5,000 per employee for non-compliance. We recommend that organisations with Northern Irish operations seek specialist advice from a Northern Irish employment lawyer on their reporting obligations and strategy. 

Although the intention behind the regulations is to seek to narrow the gender pay gap over time, the new reporting requirements will merely help you to identify, rather than tackle, any pay gaps in your business. In order to give a true picture of where within your organisation the gaps lie, and what is the cause of those gaps, you will need to carry out a deeper dive exercise, such as a legally privileged equal pay review. Again, your legal advisers can assist you with this exercise.

Helen Corden and Susannah Donaldson are gender pay gap reporting experts at Pinsent Masons, the law firm behind Out-Law.com. 

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