The Gender Pay Gap
The Government introduced the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the “Regulations”) with a view to closing the gender pay gap (the “Pay Gap”) between working men and women within the UK.
According to the Institute of Fiscal Studies, the Pay Gap currently means that women are paid 18% less than their male counterparts.
The Regulations were implemented under Section 78 of the Equality Act 2010, but will actually be effective from April 2017. Once in force, the Regulations will require private sector employers and voluntary organisations (“Pay Gap Reporters”) with more than 250 employees to publish information about the differences in pay between men and women. Pay Gap Reporters will be required to:
- Analyse their gender pay gap as of April 2017 and submit their findings within 12 months;
- Publish the data acquire don their searchable UK website so that it is accessible to employees and the public. The data must be retained for three years in order to demonstrate the progress made;
- Produce a written statement (the “Statement”) confirming that the data provided is accurate; and
- Upload the data acquired to a Government sponsored website.
Pay Gap Reporters will need to express their gender pay gap as a percentage using a calculation determined by the Regulations.
Under the Regulations, reference to “employees” includes a broad definition which has been adopted from the Equality Act 2010. Employees now include the self employed who are consultants, independent contractors and so on. This means that more employers are likely to be captured by the Regulations as more “workers” will count towards the 250+ employee threshold. However, employers will be able to exclude some employees from their reporting in circumstances where it is not reasonably practicable to obtain pay information. Difficulties in obtaining pay information are likely to arise in circumstances where the employee is not on the organisation's standard pay roll system.
Determining what pay under the Regulations is somewhat complex. Employers need to have systems in place which will determine who “full pay relevant employees” are, identify any employees whose working hours vary weekly, adopt a 12 week reference period and segregating bonus payments. Additionally, employers will need to determine the quartiles (based on hourly pay rate) employees fall within and the number of men and women within each quartile.
The final of draft of the Regulations are yet to be finalised by parliament, but it is unlikely they will meet any opposition now.
Research has revealed that within the sector, 47% of employees are female. Arguably, this statistic is unsurprising given that by its very nature the sector can offer working arrangements outside of the traditional Monday to Friday 9am to 5pm model and likewise, accommodate flexible working patterns. This is likely to be appealing to women who have childcare commitments. With this in mind, employers who are seriously committed to their corporate social responsibility and investment in employees should commit to pay gap reporting with a view to reducing their gender pay gap. Whilst there are no penalties for Pay Gap Reporters who fail to comply, the risk of reputational damage may be extensive.
For more information contact our employment team on 0345 070 6000.