Gender pay gap reporting: what are your obligations?

Gender pay gap reporting obligations have finally arrived. For private sector employers, 5 April 2017 is the first “snapshot” date, against which the pay equality data will need to be provided.

So, what exactly are the reporting obligations?

Timings

The first snapshot date is 5 April 2017 (31 March 2017 for public bodies). The date will remain the same thereafter.

Gender pay reports will need to be made a year later (4 April and 30 March).

What information needs to be published?

The following needs to be published:

Percentage difference between mean and median hourly rates of ordinary pay of male full-pay employees and female full-pay employees
Percentage difference between mean and median bonus pay between male and female employees (by head count)
Percentage proportions of male and female relevant employees paid a bonus (by head count)
Percentage proportions of full-pay employees in the four quartiles of pay.

Voluntary narrative to the statistics may also be published.

Publication

Publication needs to be made in a particular format, signed and written, and published both on the employers and government websites.

What is a full-pay relevant employee?

This is defined as an employee who is not paid zero during the relevant pay period (essentially the 12 week period ending with the week covering 5 April or 31 March).

This leaves big question marks over which categories of employees will be covered and which won’t. It appears that the following will not be covered:

Contractors supplying services through a service company,
agency workers employed by the agency, and
those based outside the UK who don’t have a sufficient connection with the UK.

This leaves a lot of grey area.

Similarly the status of non-executive directors is not made clear.

Calculation of ordinary pay

Ordinary pay will include:

Basic pay
Allowances
Piecework pay
Holiday pay
Shift premium pay

It will not include:

Expenses
Overtime
Redundancy
Payments in lieu of annual leave
Benefits in kind

What about pensions? Pay should be calculated gross of employee pension contributions. Employer contributions are disregarded for the calculation of pay.

What is included in bonus pay?

The definition is broad, and covers:

Money
Vouchers
Securities
Securities options and interest on securities
Profit sharing
Productivity or performance related bonuses
Incentives
Commission

Bonus pay will not include:

Ordinary pay
Overtime
Redundancy payments

Full-time equivalent or head count?

There is an important distinction in the calculation between a full-time equivalent and a head count basis of calculation. Ordinary pay is calculated on a full-time equivalent basis whereas bonuses are calculated strictly on a head count basis.

The reasoning behind this is that more women are likely to work part-time than men, but the government was not willing to carry this reasoning over to bonuses because this might be confusing.

What is the relevant pay period?

This will be the normal pay period (i.e. daily, weekly, monthly etc.).

What is the hourly rate of pay?

This will be calculated in a way similar to the Employment Rights Act, making distinction between employees who have normal working hours and those who don’t, and applying a 12 week averaging period to those who don’t. The provisions are very complex.

What is the meaning of mean and median and quartile?

The mean is what most people refer to as the average.

The median is the middle value where the values are all listed in numerical order.

Quartiles: this splits employees by hourly rate of pay and in 25% increments.

What should be included in voluntary narrative?

The voluntary narrative might include:

An explanation of any gender pay gaps
Measures being taken to address any gender pay gap
Comparison with similar organisations
Staff surveys that show that staff are generally happy with the situation

What are the consequences of non-compliance?

Negative publicity.
Potential action by the Equality and Human Rights Commission (who have wide ranging powers of investigation and enforcement).

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