Gender pay gap reporting

The regulations requiring big employers to publish data on their gender pay gaps came into effect on 6th  April 2017.

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 apply to private and voluntary-sector organisations with 250 or more employees.

The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 apply to public bodies with 250 or more employees.

Which employers are affected by the Regulations?

The private and voluntary sectors

The regulations cover any employer with 250 or more “relevant” employees in England, Wales and Scotland (but not Northern Ireland) on 5 April 2017 – and on the same date each year after that.

In companies with a group structure, each legal entity will need to report its data. There is no legal requirement on smaller employers to report data, but they are encouraged to do so.

The public sector

The requirements for the public sector largely mirror those for the private sector but the public-sector requirements have been introduced as part of the existing public-sector equality duty, rather than as a stand-alone requirement, and the annual “snapshot” date on which the pay information is collected is 31st March for public sector employers, as compared to 5th  April for private and voluntary sector employers.

Any authorities not listed as public bodies will be covered by the private and voluntary sector gender pay reporting regulations, as will private and international schools.

While the aim is to make the reporting requirements consistent across the public and private sectors, the public sector already has specific duties on equality, which the regulations have to reflect.  There are also differences between the public sector equality duties in Wales and Scotland as compared to England, and it remains to be seen how these differences will work out in practice.

Scotland has already said it will require all public authorities with more than 20 employees to publish their pay gap every two years and an equal pay statement every four years.

Public, private and voluntary sectors

Between them the two sets of regulations cover private, voluntary and public sector organisations across Britain. While there are slight differences in the regulatory framework for the public and private sectors, the measures of the gender pay gap are the same for all three sectors.

Employers whose headcount varies will have to report in any year in which the headcount is 250 or more.

How is an employee defined?

The regulations apply the same definition of employee as the Equality Act 2010. This is a broad definition which includes zero hours’ workers, apprentices and some self-employed people.

Agency workers will be included in any reporting by the agency with which they have a contract of employment.

Employees will be covered by the regulations if they are employed on the relevant snapshot date, work mainly in England, Wales or Scotland, and are on full pay. Employees on reduced rates of pay while on maternity leave or sick leave are excluded.

How is pay defined?

Ordinary pay’ means basic pay; allowances; pay for piecework; pay for leave; and shift premium pay. It does not include overtime pay; redundancy pay; pay in lieu of leave, or non-monetary remuneration.

‘Bonus pay’ means pay in the form of money, vouchers, securities, securities options, or interests in securities; and pay that relates to profit sharing, productivity, performance, incentive or commission. Non-consolidated bonuses are also included.

What data must be published?

Employers are required to publish six metrics:

  • The difference between the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees ( ‘the mean gender pay gap’);
  • The difference between the median the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees (‘the median gender pay gap’);
  • The difference between the mean bonus pay paid to male relevant employees and that of female relevant employees (‘the mean gender bonus gap’);
  • The difference between the median bonus pay paid to male relevant employees and that of female relevant employees (‘the median gender bonus gap’)
  • The proportions of male and female relevant employees paid bonus pay (‘the proportions of men and women getting a bonus’); and
  • The proportions of male and female relevant employees in the lower, lower middle, upper middle and upper quartile pay band (‘the proportion of men and women in each of four pay quartiles’).

Calculations for the pay gap metrics are to be based on a single pay period around the “snapshot date” of 5 April (private and voluntary sectors) or 31st March (public sector), while bonus gap metrics cover the whole year up to the relevant date. The Regulations provide detailed instructions on how the figures should be calculated.

What format should the report take?

The data required from employers must be published in English, by April 2018. Employers must publish their gender pay gap report on:

  • The gender pay gap reporting website. You can access the site here.
  • A company website that is accessible both to employees and to the public.

The information must remain on these websites for three years.

A second site, the Gender Pay Gap Viewing Service is open to the public. The site is well-laid out and easy to read, and the headline figures are backed up by access to a spreadsheet which, over time, will be populated with data from all participating employers.

The Gender Pay Gap Viewing Service can be found here

There is no requirement to publish any accompanying narrative or commentary, but many organisations will wish to explain what the figures mean. The ACAS/GEO guidance – see below – encourages employers to add a supporting narrative, as does the CIPD.

The report must remain on the website for three years, but can be left up for longer if the employer so chooses.

Who has to sign off the report?

The report must be accompanied by a written statement signed by a director, or other responsible person, vouching that the report is accurate. The ACAS/GEO guidance lists the appropriate signatories.

What are the sanctions for non-compliance?

There are no penalties as such, but this will be reviewed if levels of compliance are not satisfactory. However, non-compliance will amount to an unlawful act falling within the enforcement powers of the Equality and Human Rights Commission. The Commission’s powers of enforcement are set out in the Equality Act 2006. You can find the Act here.

The Equality and Human Rights Commission aims in the first instance, to resolve non-compliance through correspondence with non-compliant employers. Where formal enforcement action is required, the Commission will take action as set out below.

The Equality and Human Rights Commission will take a staged approach to enforcement by dividing employers by industry and initiating enforcement action against them in tranches. In order to ensure fairness and promote compliance, each tranche will comprise employers selected at random from within that industry, meaning that it will not be possible for a particular employer to predict when they will be selected for enforcement.

In 2018/19, the Commission will aim to initiate enforcement action against all employers who have not reported their pay gap data.

Employers who submit data that has not been calculated in accordance with the gender pay gap reporting regulations will be in breach of the regulations and subject to enforcement action in the same way as those who publish no data at all. While the Equality and Human Rights Commission initially intends to drive up reporting by focusing on employers who do not publish any data, it has the means to identify employers who submit statistically improbable data and will consider taking action against them.

If a private or voluntary sector employer does not comply after the Commission’s initial correspondence, it will carry out an investigation into whether they have committed the suspected unlawful act, that is, a breach of the gender pay gap reporting regulations.

A similar process will apply to public sector organisations.

You can find the detail of the Commission’s enforcement powers, together with indicative timescales for action, here.

The Commission has also undertaken to work with the Government Equalities Office to promote awareness of sources of guidance on gender pay gap reporting.

Guidance on gender pay gap reporting

ACAS/Government Equalities Office

The Government Equalities office and Acas have produced joint guidance on gender pay gap reporting. You can find the guidance here.

There is a separate mini guide on the public sector, which you can find here.

You can also find a factsheet on obligations for employers here and one on the top ten myths here.

Acas have also produced a gender pay reporting notification template. NB. this is not a template for reporting your metrics, but one for letting your employees know what you are doing.  You can find the template here.

CIPD

The most comprehensive guidance is that published by the CIPD. You can find the guide here.

You can also listen to a podcast on gender pay gap reporting here.

Government Equalities Office

The Government Equalities Office, jointly with the CIPD, has issued a guide for employers on actions to take to close the gender pay gap. These include ensuring open recruitment, introducing flexible working at all levels, supporting staff with caring responsibilities, and checking that you are paying staff fairly. The guide also recommends that you:

  • Calculate and publish your gender pay gap information, as required by law
  • Analyse your data to learn where you can achieve the biggest improvement
  • Commit to an action plan
  • Monitor your progress

You can find the guide here

Will there be guidance for employees?

There will be no guidance as such for employees, but employees are encouraged to look at their employer’s gender pay gap figures.

The Government also provides an online tool that allows the public to find out the gender pay gap for their occupation as defined in the standard industrial classifications used by the Office for National Statistics. For more on this go to Tools.  

The Business, Energy and Industrial Strategy Committee Inquiry into Gender Pay Gap Reporting

The Business, Energy and Industrial Strategy (BEIS) Committee is holding an inquiry on executive pay and the gender-pay gap in the private sector.

The Business, Energy and Industrial Strategy Committee is looking at these issues in the context of concerns about the overall level of executive pay and bonuses and as the deadline for gender-pay gap reporting is soon approaching (on 4 April 2018).

On gender pay, the inquiry will look at issues around the compliance of businesses with reporting requirements on the gender pay gap, such as whether the regulations are properly capturing the salaries of staff, and what steps companies are taking to address the pay gap. The Committee will also look at measures to be taken against companies which do not comply with reporting requirements.

Rachel Reeves, Chair of the Business, Energy and Industrial Strategy Select Committee, said:

“Excessive executive pay and gaps in gender pay are at root an issue of fairness. . . . Nearly fifty years on from Barbara Castle’s Equal Pay Act it is completely unacceptable that women are not fully rewarded for their jobs they do. Businesses must pay both women and men fully for the work they do and if they fail to do so they undermine public trust in how they operate.

Transparency on gender pay is only the beginning. We need to examine why these pay gaps persist, why within the same sector there may be companies with wildly differing pay-gaps, and what remedies are needed to tackle them.”

This inquiry is initially scheduled for two evidence hearings with an opening session on gender pay reporting due to take place on Tuesday 17 April.

The Committee invites written evidence on the following questions:

  • Whether the annual information related to pay required under the Equality Act 2010 is sufficient? Should any further information be required?
  • What is the extent of compliance? Is the information accurate?
  • How effective are the sanctions for non-compliance with reporting requirements?
  • What requirements, if any, should there be on companies to address gender pay gaps?
Written submission deadlines

For evidence on gender pay gap reporting, Tuesday 10 April 2018.

You can find more information on the inquiry here.

Last updated 2nd April 2018