Keep Calm, it’s Equal Pay Day

Today (10 November 2016) has been dubbed “Equal Pay Day”. The Fawcett Society, a women’s rights charity, has reported that due to the current gender pay gap women effectively stop earning today and will work the rest of the year for free.

According to Fawcett, Equal Pay Day is the day each year which marks the turning point where women notionally stop earning relative to men. It is always a day in November and varies according to the actual pay gap that year.

With the recent developments in the Asda equal pay claims which we reported on last month  (and similar claims against Tesco and Sainsbury’s in the pipeline) this issue is well and truly under the spotlight. Certain employers will soon be required to report on the gender pay gap within their organisation, but what should employers be doing now?

Gender pay gap reporting – the story so far

In July 2015, David Cameron pledged to close the gender pay gap within a generation. A number of consultations and responses followed. The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 were then drafted and it was envisaged that they would come into force on 1 October 2016. However they have not yet been introduced, and subject to parliamentary approval, the Regulations are likely to come into force in April 2017.

The new Regulations will apply to employers with 250 or more “relevant employees”. This will include those employees who have been employed for less than 2 years. It does not include workers, self-employed subcontractors, LLP members or employees in associated companies. The trigger date for the headcount of 250 or more will be 30 April each year.

Under the Regulations, employers will be required to publish information on the organisation’s website and upload it to a Government website. The information must stay on the website for 3 years so that the figures can be compared year on year. “Pay” for these purposes will include basic, holiday, maternity and sick pay, and shift premiums, bonuses and allowances. It will not include expenses, the value of benefits in kind or overtime. On this basis, employers will be required to publish the following information:

1. The difference in mean pay;

2. The difference in median pay;

3. The difference in bonuses paid over the entire year;

4. The proportion of men and women who receive bonuses; and

5. The number of men and women in each quartile pay band.

There is no obligation on employers to provide any information over and above the required information; however, particularly where there appears to be a gender pay gap which can be explained, employers will want to give some additional narrative. This is voluntary but is encouraged in the guidance that has been published to date.

Interestingly, there are no enforcement measures in the Regulations yet, which means that there is nothing that the Government (or anyone else) can do if employers choose not to comply. However the introduction of league tables and “naming and shaming” has been mooted, and it is likely that employers will want to avoid the reputational damage that will be associated with flouting the rules. Similarly, this is the sort of information that will be sought from organisations during tender processes.

There is also no mechanism for checking the accuracy of the information that is published, but should this be raised by a disgruntled employee it is likely to be classed as a whistleblowing issue and should be dealt with accordingly.

What should employers do now?

There are steps that employers can take now in readiness for the Regulations coming into force. Our top tips include the following:

  • Gather information – consider conducting an informal equal pay audit. Consider whether any gaps identified are because of gender or can be otherwise explained.
  • Equal work – consider whether employees are doing ‘equal work’ within the meaning of the Equality Act 2010 and ensure that employees are paid the same for doing so, unless there is a material factor for the difference which is not directly or indirectly discriminatory. Address any gaps that cannot be appropriately explained.
  • Respond appropriately – make sure that you are well prepared to answer questions from employees, unions and/or the press on any information that is published.
  • Legal privilege – if you decide to carry out a full equal pay audit, consider doing so in conjunction with a solicitor in order that the results/correspondence on the matter are not discloseable in any subsequent legal proceedings.
  • Be consistent – make sure that pay is dealt with consistently across the whole workforce.

If you would like specific advice in relation to equal pay or gender pay gap reporting or if you have any other employment or HR related issues please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01524 548494.

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