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Gender pay reporting – are you ready?

Print publication

07/03/2017

Gender pay reporting legislation is due to come into force in April 2017. The first gender pay gap ‘snapshot’ date is 5 April 2017 and first reports will be due by 4 April 2018.  A number of important changes have been made since the original draft Regulations.  Are you up to date and fully prepared?

Changes

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 will come into force on 6 April 2017. A number of important changes have been made since the draft Regulations published back in February 2016. In particular:

  • the introduction of the concept of a “full-pay relevant employee”, primarily to exclude those on sick leave or maternity leave from the hourly pay comparison
  • the exclusion of partners or LLP members
  • a change in the pay “snapshot date” from 30 to 5 April
  • a clearer definition of bonus pay and a requirement to publish the difference in both the mean and median bonus figures for men and women
  • clarification of how the quartile pay bands are to be calculated

Key preparations

With the ‘snapshot’ date just a matter of weeks away, time is now of the essence. Key checks to make include:

  • Is your organisation ‘in scope’ (in terms of the 250 employee threshold)? Be careful not to make an incorrect assumption because the final draft Regulations use the broad definition of ‘employee’ from the Equality Act 2010 so could potentially include self-employed workers, consultants and contractors. An employer must comply with the Regulations for any year where they have a ‘headcount’ of 250 or more employees on 5 April.
  • Are you ready to take a pay ‘snapshot’ in the pay period that covers 5 April 2017? The Regulations say that only ‘full pay’ relevant employees should be taken into account in calculating hourly pay rates (employees on reduced pay during the snapshot period are not included) so you need to be clear exactly who is and isn’t included.
  • Are you clear on how to calculate ‘hourly pay’? The Regulations set out 6 steps to assist with the calculation.
  • Are you clear about what you will include in your ‘bonus’ data? The Regulations specify that securities, options and interests are included in the definition of bonus so it is important not to miss things out.
  • Have you carried out a dry-run of your gender pay report? This can help identify any areas where action may be needed and can help inform any narrative you may wish to include with the report.

Providing a narrative?

Employers can choose to provide a narrative with their gender pay report. This may or may not be helpful depending on the circumstances. A narrative could explain the reasons for the results and set out actions that are being taken to reduce or eliminate a gender pay gap. It might also be used as a PR tool to show off and emphasise a particularly good report. The narrative can say why the results show:

  • Challenges – for example, an employer might explain that their executives get the highest bonuses and most of them are men. Where there is a challenge, employers should consider taking new or faster actions to reduce or eliminate the gender pay gap.
  • Successes – for example, an employer might explain that a recent change to a bonus policy has resulted in a lower bonus gender pay gap.

The narrative might also be used to show plans for long-term results. For example, an employer might want to tackle underrepresentation of women in certain roles by running a ‘grass-roots’ recruitment campaign that particularly encourages women to apply. In the short-term this might mean that more women will be on a lower starting salary, which could make the gender pay gap look higher. However, in the longer-term this would be expected to balance out and thus reduce the underrepresentation and associated pay gap.

If you would like further advice on this topic please contact David Smedley or Andrew Rayment.

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