Following the consultation which took place last summer, the Government has today published draft regulations under the Equality Act, The Equality Act (Gender Pay Gap Information) Regulations 2016. These confirm that the framework for the new gender pay reporting requirements is intended to come into force in October of this year, with the first reports due to be published in May 2017.
As previously advised, the regime will apply to private and voluntary sector employers with 250 or more employees in the UK, and will require them to publish information relating to the difference in pay between male and female employees.
What will be disclosed?
The following will need to be disclosed:
- the difference in mean pay (i.e. average pay);
- the difference in median pay (i.e. the midpoint of the range of all salaries paid);
- the difference in mean bonus pay, and the proportion of male and female employees who received bonus pay; and
- the number of male and female employees employed in different pay bands (by quartile of pay).
Interestingly, as currently drafted, overtime pay, expenses, benefits in kind, and the value of salary sacrifice schemes will not be taken into account, which is consistent with the definition of pay used by the Office of National Statistics for the Annual Survey of Hours and Earnings.
The annual report will be based on a "snapshot" of data as at 30 April each year, looking at the relevant pay period of employees (e.g. weekly, fortnightly, or monthly) during which 30 April falls.
When do I need to disclose?
The full pay report must be published within 12 months following 30 April on the employer’s public UK website, and left on the website for at least 3 years. The employer must also submit the report to the government. A director, partner, or most senior employee (depending on the type of company) must sign a statement to accompany the report which confirms its accuracy. Employers can also accompany the report with any explanatory notes or details of actions which are being taken to correct a large pay gap.
Since the initial consultation, the government have announced that mandatory reporting will apply to public sector employers in addition to private and voluntary sectors.
Possible sanctions
At this initial stage of the gender pay gap reporting, the government’s intention is to "name and shame" employers who do not comply, but they have left open the possibility of introducing civil or criminal penalties for non-compliance in due course.
There is currently a consultation on the draft Regulations to consider if any modifications should be made before they come into force, which will close at midnight on 11 March 2016.
In the meantime, many businesses are currently carrying out investigations into the pay within their organisations, under the cloak of legal privilege, to identify and address any potential issues in advance of the disclosure requirements kicking in.