Out-Law News 2 min. read

Gender pay gap reporting guidance published, but questions remain, says expert

The UK government has published official guidance intended to assist those large businesses preparing to report on their gender pay gaps for the first time.

However, although the guidance provides a helpful general overview of the new requirements, there will still be "some unanswered questions" for affected organisations with more complex employment or remuneration structures, according to employment law expert Helen Corden of Pinsent Masons, the law firm behind Out-Law.com.

"This is particularly the case around the definition of employees, what is included in the definition of 'ordinary pay and allowances', and how certain bonuses should be dealt with," Corden said.

"Organisations which are uncertain about how to proceed may wish to seek specialist advice on what is excluded or included within these definitions - but, provided that they are consistent and can explain their decisions, they should not run into serious difficulties," she said.

The guidance (35-page / 1MB PDF) remains in draft form pending approval of final regulations, which are expected to come into force on 6 April 2017. Once the regulations are in force, private and voluntary sector employers with more than 250 staff will be required by law to calculate six different types of gender pay gap information annually, and then publish the results on their own websites and on a government website within 12 months. Similar requirements are due to come into force for the public sector on 31 March 2017.

Employers caught by the new rules will be required to publish their overall mean and median pay gaps based on gross hourly pay for men and women, expressed as a percentage; as well as their mean and median gender bonus gaps. They will also be required to publish the proportion of male and female employees within each 'quartile' of their pay distribution, ordered from lowest to highest pay, as well as the proportion of both men and women that have been paid a bonus in the preceding 12 month period.

The guidance, which has been produced by Acas and the Government Equalities Office, confirms that employers must comply with the regulations for any year in which they have a 'headcount' of 250 or more employees on the 'snapshot date' of 5 April. However, "employers of all sizes" should "consider the advantages" of publishing gender pay gap information.

The regulations and guidance use the wider definition of 'employee' from the 2010 Equality Act, which means that workers and some self-employed people must be included in the headcount. Agency workers, however, are counted by the agency providing them, rather than the organisation for which they currently work.

Employers can publish narrative information alongside their calculations, but are under no requirement to do so. This should generally explain the reasons for their results, and can give details about action currently being taken by the organisation to reduce or eliminate its gender pay gap, according to the guidance. An example given in the guidance is where an employer is tackling the underrepresentation of women in science and engineering roles by encouraging them to apply for junior positions. This could increase the gender pay gap in the short term, as women progress through the organisation, according to the guidance.

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