Public sector employers to report on gender pay gap

The government has issued the draft regulations requiring specified public sector employers with at least 250 employees to report on the gender pay differences of their employees, with the data due to be published before March 2018

The move follows a consultation held last year which attracted around 150 responses. Draft legislation is now in preparation and is due to be brought to Parliament by 31 March 2016.

In its analysis of the replies, the government said it had decided to change the ‘snapshot date’ used for the pay period within scope to collect information on the hours and earnings of employees.

This was originally set as 30 April, but consultation responses highlighted that information from two tax years would need to be collated. The government says this has now been changed to 5 April in the interests of reducing the burden on employers.

The government equalities office said it has also taken on board concerns about gender pay reporting for group and multinational organisations which have multiple UK companies.

During the consultation, PwC proposed:

If a group of employers feel that disclosure on an entity basis may be misleading, an option would be for voluntary disclosure of gender pay gaps across the wider group, in order to provide context to the results for each employing entity.

The consultation feedback says this ‘sensible and proportionate approach’ will be reflected in the non-statutory guidance to be published when the legislation is passed. Similarly there were also concerns over which elements of remuneration should and should not be captured in pay gap or bonus gap calculations, and the guidance will also cover this.

Following representations, the government says the gender pay gap calculations will cover only those employees receiving their full pay during the specified pay period. For example, a man or woman taking parental leave or sick leave on full pay will be included, but an employee receiving less than full pay while on parental leave or sick leave will not be included, in order to ensure a meaningful earnings comparison.

The proposed legislation has been amended to require large employers to publish both mean and median gender bonus gaps.

The regulations have also been amended so that it is clearer that they apply to employees within the meaning of section 83 of the Equality Act 2010, so that any employees within the meaning of the act who are remunerated during the reference period would be included, such as zero-hours contractors, apprentices and some consultants.

Despite the views of some consultation respondents, the new regulations will not require companies to publish an action plan detailing their approach to closing the gender pay gap, although the non-statutory guidance will encourage employers to do so voluntarily where appropriate.

The draft regulations have been revised to clarify that employers should generate quartiles by dividing the workforce into four groups, each with an equal number of employees. All employees are ranked according to average hourly pay, starting from lowest paid to the highest paid. The employer then identifies the median (50th percentile) in this ranked distribution of all employees. This figure represents the second quartile. An employer identifies the first quartile (25th percentile) by calculating the midpoint between the smallest value (i.e. the lowest paid worker) and the median (ie, the second quartile).

To identify the third quartile (75th percentile), the employer calculates the midpoint between the median (i.e. the second quartile) and the largest value (i.e. the highest paid worker; 75% of all employees are under this value and 25% are over it in the fourth (upper) quartile.

Employers will be required to publish gender pay gap data on the company website. Although some responses felt strongly that there should be financial sanctions for employers that do not comply, the government says it does not intend to create any additional civil penalties at this point.

In its response, the government also notes:

Requiring employers to publish the required information to a government website will allow us to closely monitor levels of compliance and keep this position under review by establishing a database of compliant employers. We are currently scoping the potential functionality of that government-sponsored online portal.

Mandatory Gender Pay Gap Reporting: Government response to the consultation on draft regulations is here.

Draft regulations are here.

Published on: 26 January 2017 - By: CCH Daily