In its latest efforts to address the pay gap between male and female workers, from next year the Government is going to require large employers to annually publish data on their gender pay gap, in the hope that this will encourage private sector employers to tackle any pay gap within their organisation head on.
This mandatory reporting process will apply to employers with at least 250 employees as at 5 April each year. It is anticipated that this new procedure will come into effect in April 2017 with the first deadline for employers to publish the relevant data on their websites being 4 April 2018.
The annual information that employers are going to be required to publish is:
· the organisation’s overall gender pay gap (expressed as a percentage), using both the mean and median hourly rate of pay for female and male employees;
· the proportion of male and female employees in each of the organisation’s four pay quartiles;
· the organisation’s overall bonus gender pay gap (expressed as a percentage), using both the mean and median bonus payments received by female and male employees over the preceding 12 month period; and
· the proportion of female and male employees who received a bonus in that period.
Whilst 4 April 2018 might admittedly sound like some way off, the potential administrative burden of these Regulations on employers should not be underestimated.
A ‘relevant employee’ has been defined widely so as to include any workers (working under a contract personally to do work) who are engaged within the business on the 5 April each year. As a result, casual staff and even potentially self-employed contractors will need to be included in the headcount, depending on the nature of their engagement and some employers who might have previously assumed they would be exempt from the Regulations, having less than 250 ’employees’, are not going to be.
However, the Government has acknowledged that it may be difficult in practice for employers to include all workers in their calculations, for example if they have any workers who are not paid through the normal payroll, therefore making it difficult for the employer to obtain the necessary data. In response to concerns raised about this, the Regulations include an express exception to the reporting requirements in respect of workers whom the employer does not have (and it is not reasonably practicable to obtain) the relevant data. This will no doubt be welcome news to those employers who engage a lot of casual workers.
In terms of what employers can be doing now to prepare for the implementation of the Regulations next year, we would advise that they start thinking about:
· whether they are likely to be a ‘relevant employer’ as at 5 April 2017, by reference to the number of individuals they engage and the nature of those engagements;
· analysing their employees’ remuneration packages and identifying what payments will need to be included in the necessary calculations;
· potentially carrying out the pay gap calculations now (for example using April 2016 figures) in order to identify whether they are likely to have a considerable pay gap in 2017; and
· if they suspect that they are likely to have a significant gap, how they can explain this gap in any accompanying narrative (including a narrative is optional under the draft Regulations but advisable where the gap is significant and could have negative PR implications).