New gender pay reporting legislation – how should companies respond?

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On 11 January, International Parity at Work Day will be observed globally for the first time.

This new annual event is being launched to champion the value of workplace diversity and raise awareness of workplace inequality.

One area where workplace inequality continues to persist is gender pay. Data from the Office for National Statistics shows that men typically earned an hourly rate 18.1% higher than women in 2016. In the financial services sector this rose to 37.4%.

The evidence of a gender bonus gap is starker still. The median gender bonus gap across all sectors is 45.4%, rising to 54.9% for those working in financial services.

From 5 April, new legislation on gender pay reporting addressing this issue comes into force. For the first time, private-sector, voluntary sector and public-sector organisations with 250 or more employees will have to publish information on gender pay and bonus gaps, documenting the differences between men and women’s pay.

The information required will need to cover the mean and median gender pay and gender bonus-pay gaps, as well as information on the proportion of men and women receiving a bonus payment.

So what are the key things companies need to do to comply with the new legislation?

First, employers must compile data in a format laid down in the Regulations, calculate their pay gaps using a standard set of rules and publish a report, in English, by April 2018, on a company website that is accessible to employees and the public. The report must include six metrics:

  • mean average gender gap;
  • median gender pay gap;
  • mean gender bonus gap;
  • median gender bonus gap;
  • proportion of men and women getting a bonus; and
  • proportion of men and women in each of four pay quartiles

There must be a written statement signed by a director vouching that the report is accurate, and it must remain on the website for three years. There is no legal requirement to publish commentary explaining the figures, but this is strongly encouraged. There is a requirement that the report should also be uploaded to a government website, but no details of this have yet been released and work is still believed to be under way to build the website.

Employers need to base their first report on the pay period in which 5 April 2017 falls (typically the week or month around that date), while the required bonus information should take into account the 12 months leading up to this date.

The Regulations draw on the same definition of employee as the Equality Act 2010. This is a broad definition, which includes zero hours workers and apprentices. One exception to this general approach is that partners in limited liability partnerships who are covered by the Act are not included. Agency workers are also excluded as it is expected that they would be included in any reporting by the agency with which they have a contract of employment.

Employees are covered by the Regulations if they are employed on 5 April, work mainly in England, Wales or Scotland (but not Northern Ireland), and are on full pay. Employees on reduced rates of pay while on maternity leave or sick leave are excluded.

Gender pay gap reporting will be a significant challenge for HR and reward professionals this year. Companies will need to get it right in order to protect their reputation and employer brand, and to avoid the legal penalties that those who do not put the time and effort into complying properly with the Regulations may face.

XpertHR is already helping employers get to grips with the issue by providing a range of guidance and support, FAQs, and even a full reporting service, where we do the calculations on their behalf. Over the past year, we carried out these calculations for more than 150 organisations to help them to understand their gender pay gap.

With gender pay gap reporting now moving from good practice to question of legal compliance, we expect to be able to help many more.

For more information visit: www.xperthr.co.uk

Mark CrailAbout the author:

Mark Crail is XpertHR’s content director in the UK. He was previously managing editor and head of salary surveys and has 35 years’ experience in business, professional and consumer publishing both in print and online. Beginning his career in local newspapers, Mark moved into political reporting before specialising in healthcare management and employment issues.

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