On Friday, the Government published the brand new draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016, which are intended to come into force in October 2016. A follow up consultation has also been launched inviting feedback on the draft Regulations.
Who does this affect?
The Regulations are to apply to employers with 250 or more “relevant employees”, meaning those who ordinarily work in Great Britain and whose contract is governed by UK legislation. Relevant employees do not include workers, self-employed subcontractors, LLP members or employees in sister companies or associated companies.
What will they need to do?
The new rules will require employers to publish specific information on the gender pay gap within their organisation. The relevant date for each period will be 30 April, with the report being published on that date for the preceding 12 month period. So the information relating to April 2017 to April 2018 will be published in April 2018. Affected employers will be required to publish the following information for that period:
- The difference in mean pay based on average hourly rates published as a percentage
- The difference in median pay based on hourly rates published as a percentage
- The difference in average bonuses paid to men and women
- The proportion of men and women who receive bonuses
- Gender pay split breakdown between quartile pay bands
“Pay” for these purposes includes basic pay, paid leave, maternity and sick pay, bonuses and allowances. It does not include overtime pay, expenses, the value of benefits in kind and salary sacrifice schemes, redundancy pay, arrears of pay and tax credits.
The gender pay gap information should be published each April on the employer’s website (where it must remain for 3 years), and also uploaded to a government website.
What if they don’t comply?
Interestingly, there are no enforcement measures in the Regulations so arguably there is nothing to say that employers have to comply with them. As matters stand, there is no provision for any fines or other sanctions for non-compliance, although these may be introduced. There is also no mechanism in place for checking the accuracy of the information that is published.
However, the Government has unveiled plans to report the information in league tables, which may well name the best and worst organisations broken down by sector, not to mention potential pressure from unions, support groups and the press for employers who choose not to comply. There could also be whistleblowing implications if an employee was to raise a concern regarding the accuracy of the information published by his or her employer.
Conversely, if employers do comply with the Regulations, any gender pay gap report that is published is likely to tip employees off about potential equal pay claims under the Equality Act 2010. It is feasible that in some cases, a report could even help employees to bring claims against their employer.
What happens now?
If you are an employer with over 250 employees, you should begin gathering information regarding pay ahead of the new Regulations coming into force. You should consider which employees are doing ‘equal work’ within the meaning of the Equality Act 2010. Equal work can mean ‘like work’ (the same or broadly similar); work rated as equal as part of a job evaluation study; or work otherwise of equal value in terms of the demands made on any employee.
If pay gaps are identified, you should consider any reason for the pay gaps now, before it has to be reported. You should also consider the procedures that you currently have in place to recruit and retain women and how these may help to reduce the pay gap within your organisation.
We will keep readers updated regarding gender pay gap reporting as the year progresses. In the meantime, if you would like advice or assistance in relation to equal pay, including whether the reporting rules could result in equal pay claims, or you need advice on any other employment law or HR related matter please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01524 548494