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New Gender Pay Gap Reporting rules explained

View profile for Phil Cookson
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Large numbers of  businesses are about to become subject to new Gender Pay Gap reporting regulations. Due to come into effect next spring, many companies appear to be unaware of the new regulations.

Background

The difference between men’s and women’s pay, “the gender pay gap”, is monitored by the Office of National Statistics and has increasingly been the focus of political attention given the widening gap which has occurred since the early 2000s.

One strategy being adopted by the government to combat the widening gap is to require businesses to report on the extent of the gender pay gap that exists in their organisation.  The Equality Act 2010 (Gender Pay Gap Information) Regulations are currently in draft but are expected to be finalised shortly and then take effect in the spring of 2017.

The new regulations

The Regulations, whilst subject to final amendments, will require all employers with 250 plus staff to publish a report which sets out:

  • Overall gender pay gap figures calculated using the mean and median average hourly pay.
  • The number of men and women in each of four pay bands which cover the range of pay rates across the whole workforce.
  • The gender pay gap as applies to bonus payments taking account of average bonus payments made over a 12 month period.
  • The proportion of men and women who received a bonus payment in the same 12 month period.

The 250+ headcount

The regulations will apply to relevant businesses which are defined as having 250 or more employees on 30 April in each year.  For many employers it will be obvious whether or not they are affected as it is clear how many people they employ and the number does not vary greatly. 

For businesses with a headcount close to 250 and which have regularly fluctuating staffing levels or use casual labour at seasonal peaks, it may be necessary to carefully assess the number of employees which may count.

In answering the question “which employees count” careful thought needs to be given to casual or “bank” staff who are employed albeit used on an ad hoc basis, and those on zero hours contracts, as they may need to be included in the count. 

There is the potential that the final regulations when implemented will include a wide definition of “employee” which may bring members of limited liability partnerships into the count as they are considered to be workers.

Agency labour?

Businesses are expected to only be required to count directly employed individuals in the headcount for the purposes of the regulations. This means that labour provided by agencies will not be counted which may be significant for businesses which utilise agency labour as opposed to directly employing casual staff.

It was not that long ago that many businesses sought to directly employ casual labour and avoid the effects of the Agency Workers Regulations 2010 (“AWR”). Whether or not avoidance of gender pay gap reporting will prove enough of a reason to go back to agencies in order to reduce the headcount remains to be seen but it could be a factor when considering how temporary/casual labour is used in the future. This is of course assuming the AWR survive any post Brexit cull of EU derived legislation implemented in the UK.

Non-compliance

The consequences of non-compliance with the regulations are, at present, likely to be limited to the publication of a business failing to comply. For the moment at least, it is thought that the threat of negative publicity is likely to be a more positive way of trying to close the gender pay gap with the concern that civil enforcement would risk outsourcing of lower paid roles carried out by women. 

Whether or not the risk of negative publicity will encourage widespread action to address the gender pay gap remains to be seen but it is clear some organisations are actively taking steps to address their own gender pay gaps. For instance, The University of Essex has reported taking steps to reduce its gender pay gap by increasing the pay of female employees in order to bring their pay in line with male counterparts.

Taking positive action now may allow the publishing of gender pay gap data to be utilised as a positive for businesses which have a limited gender pay gap compared to others in their industry.

Further action

The calculation of the gender pay gap may well become a job for an accountant but the work in assessing whether the accountant is needed at all is likely to remain a job for management and HR departments to consider now and in advance of 30 April 2017.

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