The gender pay gap is defined as the relative difference in the average gross hourly earnings between women and men. New proposals announced by the government and set out in the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the ‘Regulations’), will mean that, once passed, organisations will be under a duty to report on any gender pay gaps within their business.
The reporting requirement will apply to all private and voluntary sector organisations in England, Wales and Scotland that have over 250 employees. Partners and LLP members and those working for public authorities will not count towards the number of employees.
The government has released new draft Regulations, which are now subject to Parliamentary approval. These have provided us with some important information, namely that:
- Organisations with more than 250 employees will be required to calculate their gender pay gap from 5 April 2017, and publish the details by 4 April 2018
- Both the ‘median gender pay gap’, and ‘mean gender pay gap’ must be published
- The pay distribution must be divided into four bands based on hourly rate of pay, and organisations must work out the number of men and women in each quartile. It looks like organisations can decide the precise range of the bands
- An annual date of 5 April has been set for organisations to take a ‘snapshot’ of what employees are being paid, beginning April 2017
- Organisations will also have to publish the difference between their mean and median bonus payments to men and to women, and the proportion of male and female employees that receive a bonus. This will be taken over a 12 month period ending 5 April rather than as a snapshot
- The figures must be published on the employer’s website, and signed by a director or equivalent with a written statement confirming that the information is accurate and
- The government will also publish the information in league tables
Penalties for non-compliance
Under current proposals, there are no enforcement measures expressly mentioned in the Regulations; however, the Explanatory Note which accompanies the Regulations contains a statement that a failure to comply with an obligation imposed by the Regulations constitutes an ‘unlawful act’ which empowers the Equality and Human Rights Commission to take enforcement action. The Regulations do not specify what penalties or enforcement action would apply but it could include an investigation into employers who fail to publish a report. Organisations will also have their figures published on a government website. The government has decided to review this in a few years, once gender pay gap reporting is a well-established practice.
The government is hoping that the threat of being ‘named and shamed’ will be a deterrent. The information on the government website will be used to monitor compliance and also to publish tables showing the pay gap across particular sectors. For those organisations with a significant gender pay gap, the public relations effect could be extremely detrimental and open organisations up to potential discrimination and equal pay claims, in addition to negative publicity and bad employee relations. This could also impact the recruitment and retention of talent.
This new reporting requirement will be extremely onerous for some organisations and it is key to ensure that the necessary information and resources are in place now to make the calculations.
The Regulations will have a burdensome impact on organisations with complex pay structures and large workforces as they will need to factor in the time it will take to gather the data as well as deciding who within the organisation will have responsibility for compiling the information. It is then important to consider the results of the calculations and perhaps compare these with other businesses within the sector. Whilst April 2017 may seem far away, organisations are advised to begin the process now in order to avoid potential problems later.
To discuss how the gender pay gap requirements affects your business please speak to our Leisure & Hospitality Team on 0118 952 7254 or via our email address leisure&[email protected]. Further updates will be announced through our twitter account @BTLeisureHosp.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.