January 25, 2018
As the recent furore over pay levels at the BBC demonstrates, the gender pay gap is never far from the headlines. The resulting media coverage ought to have been sufficient to make any organisation pause for thought – even those considerably smaller and less well known than the BBC. And, although the gender pay gap is reportedly at its lowest level for twenty years, no organisation is immune to charges of institutional sexism as regards pay levels for male and female employees.
In April 2017, two new regulations came into force: the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, and the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017. Both apply to organisations with 250 or more employees, with the former covering the private and voluntary, and the latter applying to public bodies. The regulations require affected organisations to publish data on their gender pay gap by April 2018.
Who counts as an employee?
Both sets of regulations use the same definition as the Equality Act 2010. This includes zero-hours workers and apprentices. Consultants may also count as an employee.
Anyone on reduced rates of pay while on sick leave or maternity, adoption or shared parental leave is excluded. Agency workers fall under the umbrella of the agency with which they have an employment contract.
The government has provided non-binding guidance on how to interpret the meaning of ‘employee’ but it may be necessary to take specialist legal advice to ensure all relevant individuals are included.
Do similar requirements apply to smaller employers?
Not currently – although they are encouraged to monitor their gender pay gap. Moreover, given that there is a definite trend towards decreasing tolerance of gender pay gaps, it may be prudent for smaller organisations to follow the lead set by larger ones. Organisations with fluctuating headcounts should also remember that the gender pay gap reporting requirements apply to any year in which the headcount is 250 or more, even if it was below that level the previous year and is expected to be below that figure once more in the following year.
What must the report contain?
The report needs to contain six pieces of information.
1. The difference between the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees.
2. The difference between the median the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees.
3. The difference between the mean bonus pay paid to male relevant employees and that of female relevant employees.
4. The difference between the median bonus pay paid to male relevant employees and that of female relevant employees.
5. The proportions of male and female relevant employees paid bonus pay.
6. The proportions of male and female relevant employees in the lower, lower middle, upper middle and upper quartile pay band.
What counts as ‘pay’ and ‘bonus’?
‘Pay’ means an employee’s basic pay. It covers pay for leave and any pay for piecework or shift premium pay. It does not cover overtime pay or any non-monetary remuneration. It also does not include redundancy payments or payment in lieu of taking leave.
‘Bonus pay’ means money, securities, securities options, interest in securities, vouchers, non-consolidated bonuses, and any pay relating to profit sharing, performance, incentive, commission or productivity.
Where to publish the information?
Organisations must publish the collated information on their own website (which needs to be accessible both to employees and the general public) and on the gov.uk website. The information must be published on an annual basis. The deadline for first publication is approaching rapidly: 4th April 2018 for private and voluntary sector employers, and 30th March 2018 for public sector organisations.
What are the penalties for failing to publish the required information?
There are no civil or criminal penalties as such but this does not mean that the legislation is toothless. The potential for reputational damage is significant and, as evidenced by the BBC, not to be underestimated. Additionally, a tribunal considering an equal pay claim would be likely to draw adverse inferences from inaccurate or absent published information.
If you are an employer and feel like you would like more advice on this matter, do not hesitate to get in contact with our experienced employment team.