Gender Pay Gap Reporting – A Quick Overview
The Gender Pay Gap (GPG) Regulations, coming into force on 6 April 2017, will require large private and voluntary sector employers to publish calculations that show the pay gap between their male and female employees on an annual basis. ‘Large’ employers are those with a ‘headcount’ of 250 or more employees on the “snapshot date”, which is 5 April in the relevant year. The wider definition of an employee is used here and it therefore includes workers, as well as some self-employed people.
The GPG is not the same as equal pay. It shows the difference in the average pay between all men and women in a workforce. It is always expressed as a percentage and is calculated by working out the difference between the average pay of all male employees and the average pay of all female employees, dividing that number by the average pay of all male employees and expressing the result as a percentage, to illustrate the difference or ‘gender pay gap’.
Public sector employers will be subject to similar reporting obligations, but with the “snapshot date” being 31 March, rather than 5 April, requiring their first gender reports to be published by 30 March 2018.
Affected employers will be required to publish:
- Overall GPG figures for relevant employees, calculated using both the mean and median average hourly pay.
- The proportion of men and women in each of four pay bands (quartiles), based on the employer’s overall pay range.
- Information on the employer’s gender bonus gap (that is, the difference between men and women’s mean and median bonus pay over a 12-month period).
- The proportion of male and female employees who received a bonus in the same 12-month period.
In these circumstances, the term “pay” is defined as basic pay, bonuses, allowances (such as on-call and standby allowances) pay for piecework, pay for leave (but only fully paid leave) and shift premium pay. It excludes employer pension contributions, overtime pay, expenses, pay in lieu of leave, benefits in kind and the value of any salary reduction under a salary sacrifice scheme. It must be calculated using gross figures, before any deductions have been applied.
To generate the figures, employers will need to calculate an hourly rate of pay for each full-pay relevant employee. ‘Full-pay’ means the usual full pay received by the employee when working. This is determined using the six-step procedure set out in Regulation 6 of the GPG Regulations.
“Bonus pay” is defined as:
- Remuneration in the form of money, vouchers, securities, securities options, or interests in securities; and which
- relates to profit sharing, productivity, performance, incentive or commission.
It does not include ordinary pay, overtime pay or remuneration referable to redundancy or termination of employment. The relevant period for bonus pay reporting is the 12-month period ending on the “snapshot date”. So, for the first GPG report, employers will need to take account of the bonuses paid between 6 April 2016 and 5 April 2017. It is not necessary to include bonuses paid to relevant employees who have left the organisation before the “snapshot date”.
Employers will be required to report on the proportion of men and women in each of four pay bands. Employers will generate their own “quartiles”, each containing an equal number of employees. The proportion of male and female employees in each quartile must then be reported in percentage terms. Employers are not required to publish the monetary range of each pay band. They are only required to be described as lower, lower middle, upper middle and upper.
The employer must publish the results on their own website, as well as a government site, within 12 months of the “snapshot date”, that is no later than 4 April 2018, and annually thereafter. They must retain this information online for three years. The employer will have the option to provide narrative with their calculations to explain any reasons for the results or any actions that are being taken to improve them.
A written statement of accuracy must accompany the required information and be signed be a senior individual, such as a director or equivalent.
There are no sanctions for failing to comply with the reporting obligations or for publishing inaccurate or misleading reports. However, the government will run period checks to assess non-compliance and will potentially establish a database of compliant employers.
