Will you be on the 'Naughty' or 'Nice' List?

by Julie Bann and Adrian Hoggarth

Gender Pay Gap Reporting

The Government has produced draft Regulations to govern the new Gender Pay Gap Reporting structure and has invited comments by 11 March 2016.

As of April 2017, employers with over 250 employees will have to publish statistics on any gender pay gap in their business.

The draft Regulations are the first indication of what this required report will look like.

Defining Pay

Pay is defined widely and includes basic pay, paid leave, sick pay, maternity pay, area allowances, shift premium pay, bonus pay and other payments including car allowances paid via PAYE, on call, standby pay and clothing allowances.

It does not cover overtime, the value of salary sacrifice schemes, benefits in kind, redundancy pay or tax credits.

The definition of bonus pay is very wide and will cover LTIP, CSOP, SIP and EMI schemes. It does not cover deferred incentive awards.

This will have a particular impact on certain sectors including the financial and media sectors where variable pay can amount to a significant part of the total compensation package and when the calculation of individual bonuses is often less than transparent.

Calculation

You will be required to publish the overall mean and median gender pay gaps from a specific pay period every April from 2017 based on the hourly rate.

You will also be required to publish the difference between the mean bonus payments for men and women including the percentage of men and women entitled to receive a bonus.

The information should be broken down into Salary Quartiles. This means 4 equal groups containing a quarter of the data. The groups will be determined by each employer dependent on its salary range.

This will be indicative of the representation of men and women at all levels within the business.

Where to Publish

The report must be published on your website and be available for three years to show any improvement that you have made. The report will also be uploaded onto a government-sponsored site.

League Tables

The government proposes to publish league tables ranking different employment sectors by pay gap, allowing women to “see how sectors compare”. While the government does not propose to name and shame individual employers on this list, it is likely that it will be relatively straightforward for other organisations to collate the information and produce detailed league tables highlighting individual employers’ performance in comparison to their competitors.

Consultation

The Regulations are still in draft and open to consultation until 11 March 2016.

Action

Your gender pay report will have a significant impact on:

– Recruitment and retention of employees; and

– Brand reputation

Employers affected by these Regulations should act now in reviewing their statistics and considering their strategy for communicating the gender pay gap report and justifying any pay gap or at the very least putting into context any pay gap and the steps they propose to take to reduce that pay gap.