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6th September, 2016

Act now to avoid gender pay gap embarrassment

The Equality Act (Gender Pay Gap Information) Regulations 2016 which require all businesses with more than 250 employees to publish detailed statistics on gender pay within their organisation are expected to come into force on 1 October 2016. This will mean that the first snapshot report will be required in April 2017 with the first full report due in April 2018, giving employers time to prepare for the compliance requirements.

While there have been some moves to eliminate differences between the pay of men and women, statistics from the Office for National Statistics identify an average gender pay gap of 19%. Those businesses with a gender pay gap are concerned that they have not yet addressed this issue and may face damage to their reputation from placing this information in the public domain.

Section 147 of the Small Business, Enterprise and Employment Act 2015 requires businesses to publish the information on their website and a Government-sponsored website. The Government will also publish league tables by sector to highlight gender pay disparity.

It is hoped that this legislation will deal with existing gender pay gap issues and also highlight those businesses with robust and fair pay structures.

Exempt from the reporting requirements are casual workers (assuming they are not employees) or staff whose contracts are not governed by UK law. Failing to report carries a fine of £5,000 so it is advisable to seek legal advice if you are unsure whether the legislation is applicable to your business or particular members of staff.

Under the new rules businesses need to report mean and median gender pay gaps, gender bonus gaps and the number of men and women in each quartile of the company’s pay distribution based on gross figures. Firms will be asked to report on specific pay periods based on whether they pay staff weekly or monthly.

Businesses are also being encouraged to include narrative giving them the opportunity to explain any gaps or anomalies. This aspect is voluntary although the regulations strongly encourage it.

The most important thing to do is to look at your current payroll and assess the gender pay gap to see how you can reduce it before reporting is enforced. You will need to look at standard pay, bonus pay and benefits.

Further advisory details are likely to be issued in the coming months but now is the time to act in order to reduce any pay anomalies within your business.

For advice on employment law matters contact the Aaron & Partners Employment law team

Helen Watson

Partner & Head of Employment

[email protected]

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