Gender Pay Gap Reporting – A Step Towards Equality?
23rd May, 2017
Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI 2017/172) (“GPG Regulations”) and the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (SI 2017/353) (“SDPA Regulations”) all large private, voluntary and public sector employers must publish details of their Gender Pay Gap on both their own website and a designated government website. The GPG Regulations came into force on 5 April 2017 and private and voluntary sector employers must publish their first set of data by 4 April 2018. The SDPA Regulations came into force on 31 March 2017 and public sector employers must publish their first set of data by 30 March 2018.
The Government Equalities Office states that the reporting is intended to assess: “equality within the workplace, female and male participation, and how effectively talent is being maximised.”
Although the regulations for both the GPG Regulations and SDPA Regulations are similar, this article will focus upon the former. This article will consider: employers and employees who are subject to the GPG Regulations; the compulsory calculations and publishing the calculations.
Employers that must report
Private and voluntary sector employers must be a “relevant employer” meaning that they must employ 250 or more employees on the “snapshot date”, being 5 April each year in accordance with regulation 1(2) of the GPG Regulations.
Employers who are part of a group of companies will have a separate obligation to report, based on the amount of employees within each company, meaning that large groups may have to produce several reports. If one company has less than 250 employees they do not have a duty to report. This is intended to promote ‘meaningful’ reporting as a company entity may operate across a wide range of sectors which could discourage full representation.
Employees to be included
The GPG Regulations are complex and one of the questions posed is the definition of an employee. The GPG Regulations adopt a wider definition of an employee as per section 83(2)(a) of the Equality Act 2010 (“EqA”) which provides that an employee includes anyone ‘…under a contract of employment, a contract of apprenticeship or a contract personally to do work.’
This means that employers must consider their wider workforce, which includes: employees; casual workers and some contractors, when assessing whether they are subject to the scope of the GPG Regulations. Again, the employee must be a “relevant employee” meaning that they are employed on 5 April of each year.
The compulsory calculations
There are six calculations for Gender Pay Gap reporting. They include:
- the average Gender Pay Gap as a mean average, expressed as a percentage;
- the average Gender Pay Gap as a median average, expressed as a percentage;
- the average bonus Gender Pay Gap as a mean average, over a period of 12 months, expressed as a percentage;
- the average bonus Gender Pay Gap as a median average, over a period of 12 months, expressed as a percentage;
- the proportion of male and female employees receiving a bonus payment over a period of 12 months; and
- the proportion of male and female employees in each of the four quartile pay bands.
The GPG Regulations, by requiring employers to publish their mean and median calculations, are intended to give greater depth and transparency to an employer’s analysis. Additionally, they are intended to help assess equality within the workplace; female and male participation and the extent to which female employees are promoted within the workplace. This in turn will help an employer to identify any issues that need to be dealt with and will support future action.
Publishing the calculations
The results must be published on a publicly accessible website, including the employer’s website(s) and a government website. Regulation 15(1) of the GPG Regulations provides that the calculations must be published: “(a) in a manner that is accessible to all its employees and to the public; and (b) for a period of at least three years beginning with the date of publication.” Furthermore, a written statement from a senior individual must support all publications, confirming the accuracy of the data.
Although employers are under no obligation to do so, employers may publish a narrative alongside their calculations to illustrate their long-term action plan(s) to help reduce their Gender Pay Gap. The ACAS Guidance encourages this explaining that it will help any audience to “understand the organisation’s view of why a Gender Pay Gap is present and what the organisation intends to do to close it.” For example, an employer may wish to increase the number of women within a stereotypically gendered role by running a recruitment campaign appealing to women. Although in the short-term this may increase the Gender Pay Gap because more women would be receiving the starting salary, the benefits in the long-term would prevail by helping to reduce the underrepresentation of women within the targeted roles.
The ACAS guidance recommends that action plans should be controlled by Senior Management to ensure that they are implemented, monitored and evaluated.
Although the aims of the GPG Regulations should certainly be applauded, the impact of Gender Pay Gap reporting is yet to be seen since the GPG Regulations have only recently been brought into force. The absence of any enforcement mechanisms may deter reporting compliance. However, the Government has suggested that they will monitor levels of compliance and they will establish a database for compliant employers. Whether or not this will be made publicly accessible, and whether or not the threat of negative publicity will improve equality within the workplace, is yet to be established. Nevertheless, close monitoring and publicity would be a step towards ensuring that employers are complying with their Gender Pay Gap reporting obligations.
For any further advice regarding gender pay gap reporting, please our Employment department at Aaron and Partners LLP
As produced by Helen Watson for Gap Insight May/June 2017
To read the May/June 2017 issue of Gap Insight in full please click here