14th Jul 2016

Man v Woman

Andy Murray and Serena Williams may have won the same prize money (a bumper £2 million each ) for winning their respective Wimbledon tennis singles titles in 2016, however this is not always the case for working men and women when it comes to pay.

The reality is that average pay for men is greater than that for women.

So, in an effort to help close and tackle this pay gap, new regulations - originally scheduled for 1st October 2016, but actually coming into force on 6th April 2017 - will require many employers to publish an annual report about employees’ pay with reference to their gender.

These regulations will require private and voluntary sector employers with 250 or more employees to collect their gender pay gap information as at 30 April 2017, and then publish it within the following 12 months.

What information needs to be published?

The key information required includes:

  • The percentage difference between the mean and median gross pay for male and female employees.
  • The number of men and women in each of 4 pay bands, based on the employer’s overall pay range.
  • The mean (but not median) percentage difference in bonus paid to men and women over a 12 month period.
  • The proportion of men and women who received a bonus in the same 12 month period.

Employers will not have to publish data by job type/grade, or the number of full/part time employees. However, they are encouraged to provide some explanation as to any pay gaps, and also include what action they plan to take to close them.

What counts as pay?

“Pay” is defined to include most types of remuneration paid through the payroll, with the exception of overtime, but including bonus pay. Expenses, benefits in kind and the value of salary sacrifice schemes are excluded.

Pay also includes sick and maternity pay. As most women will receive much lower, or no pay for at least some of their maternity leave, this has created concern that where several women in an organisation are on maternity leave, the gender pay gap may be bigger than it actually is.

When and where do the reports need to be published?

Affected employers must analyse their gender pay gap each April, starting on 30 April 2017, and publish their first report by 29 April 2018 (and yearly thereafter).

The report must then be published on the employer’s website and be kept online and publicly available for 3 years. It must also be uploaded to a Government sponsored website where compliance can be monitored.

What if an employer fails to publish the report?

Currently, there’s no indication that the Government intends to take criminal or civil action against employers who fail to publish the report or publish a non-compliant report. However, the Government has stated that it will run checks to assess for non-compliance and publish tables by sector of employers’ reported gender pay gaps.

It appears the door has also been left open by the Government to publicly identify and “name and shame” those employers who have published significant unexplained pay gaps, or published no report at all. This could then lead to reputational damage and adverse publicity for those organisations as a result.

Don’t wait - take action now!

Although the first reports don’t have to be published until April 2018, here are some steps we recommend your business can take now to prepare for the new regime:

  • Consider whether there’s likely to be 250 or more employees in your organisation as at 30 April 2017;
  • Consider the full pay packages offered to employees, including all benefits and any salary sacrifice schemes to establish which elements of “pay” need to be included and reported; and
  • Review current pay scales and practices to identify areas of concern and, if possible address them before the publication deadline. This may include carrying out an audit of any bonus schemes offered and when such payments are made to employees.

Further guidance from the Government on how to prepare the reports and finalising what needs to be considered is expected later this summer, so watch this space and we’ll keep you updated when we know more.

Written by Mike Patterson of Berwins Solicitors.

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