Gender Pay Gap Reporting

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 new regulations

The Regulations,require all employers with 250 plus staff to publish a report which sets out:

Overall gender pay gap figures were calculated using the mean and median average hourly pay.
The number of men and women in each of the four pay bands covers the range of pay rates across the whole workforce.
The gender pay gap as applies to bonus payments taking into account 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 apply to relevant businesses which are defined as having 250 or more employees on 30 April 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 AWRsurvive 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. At 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 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 their 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.