Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

Women are more likely to be found in part time work and/or be found in lower paid jobs than men. Women are also more likely than men to leave the workforce after having children. What this tends to mean is that average pay for women is lower than that of men.

The ONS has published provisional data for 2016 which shows that the gender pay gap currently stands at 18.1% – meaning that on average women earn 82p for every £1 earned by men. While this has reduced from 27.5% in 1997, there is still some way to go to close the gender pay gap and reach true equality in the workplace.

The government has been taking steps to reduce the gap and on 6^th December 2016 published the revised version of the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which will make gender pay gap reporting mandatory for larger employers. Subject to parliamentary approval, the Regulations are expected to come into force on 6^th April 2017.

The Regulations will apply to employers with at least 250 employees (headcount) and will create a system of mandatory reporting; requiring employers to publish the following gender pay gap information (“GPG Information”):

1. Overall gender pay gap figures, expressed as percentages, calculated using both the mean and median average hourly pay (the use of mean and median averages avoids both the over-representation of low-earning women and high earning men and ensures the calculation is unaffected by a small number of high earners);
2. Details of the number of male and female employees employed in quartile pay bands;
3. The difference between men and women’s mean and median bonus pay over a 12 month period; and
4. The gender bonus gap being the proportion of men and women receiving a bonus in a 12 month period.

Note, the definition of “employee” extends to casual workers, zero hour workers and self-employed workers such as consultants, independent contractors etc. As such it may capture more individuals within your organisation than you anticipate.

The GPG Information will be based on a snapshot of pay information taken on 5^th April each year. The first snapshot date will be the 5^th April 2017, meaning that the first reporting date will now be on or before 4^th April 2018.

Employers can volunteer to publish a narrative along with their GPG Information, highlighting any circumstances or anomalies which may have caused a pay gap and setting out what remedial action they plan on taking to reduce those gaps.  We would recommend all employers take this opportunity, particularly if there are any adverse statistics to explain.

Employers will be obliged to publish their GPG Information on a government-sponsored website; which will then be used to create a database of GPG Information, organised by sector. Employers will also be required to publish a report containing the GPG Information on their own website, keeping the results online for at least 3 years to show what progress has been made.

Failure to comply with the Regulations will be an unlawful act for the purposes of Part 1 of the Equality Act 2006 but the Regulations do not create any specific additional civil or criminal penalties. Employers who do not comply with the reporting obligation or who publish adverse information could experience reputational damage/negative publicity, in addition to employee attraction/retention issues.

Larger employers should, therefore, be taking steps now to identify whether the gender pay gap reporting requirements will apply to them (particularly who are “employees” and what aspects of remuneration/bonuses will be caught) and to plan:-

1. how they will collate and publish the requisite data; and
2. what systems and processes they can put in place to analyse their data.

Employers should also be considering what can be done now to address any adverse pay gaps, bearing in mind that remedial action should be taken prior to the snapshot date and ideally by no later than 28^th February 2017. Employers should be taking action now in relation to bonus payments, as the Regulations require employers to report on bonus payments made during the period of 6^th April 2016 – 5^th April 2017.

This is not only a particularly complex area of law but new to everyone. As such, if your business is caught act now and take advice.

We are working with QCS to prepare an employer’s Guidance Handbook on GPG Reporting and this will be available in early 2017.