Reward insight
Hannah Pryce, associate at Howes Percival LLP, explains gender pay gap reporting requirements Minding the gap
I t has been nearly five decades since the Equal Pay Act was introduced and women are still being paid less than men. Against this backdrop, the government has introduced the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (‘the Regulations’). Due to come into force on 6 April 2017, the Regulations require organisations within the private and voluntary sector to produce an annual gender pay gap report. Similar regulations placing the same requirements upon the public sector are expected to come into force on 31 March 2017. The Regulations are only applicable to organisations with 250 or more employees on 5 April 2017 (and yearly thereafter). If an organisation has less than 250 employees on 5 April in any given year, there is no duty to report. In the public sector, the relevant date for this and all other reporting obligations is 31 March. When assessing headcount, organisations will need to include employees, workers and some self-employed people personally performing work. Agency workers will not be included but may count towards the agency’s reporting obligations. The annual report must set out: ● the difference in mean and median hourly pay between male and female full pay employees ● the difference in mean and median bonus pay between male and female employees ● the proportion of males and females who have received bonuses ● the proportion of males and females in each salary quartile. Organisations will need to analyse their pay information from data which is collected on 5 April of each year, starting in April 2017. They need only review the pay received by employees who are in receipt of ‘full pay’.
Employees who are receiving reduced or nil pay (perhaps because they are on sick leave or maternity leave) during the pay period for 5 April should not be included in the calculations. ...based on the gross hourly rate of pay, meaning organisations must also calculate the weekly hours... Pay needs to be calculated based on the gross hourly rate of pay, meaning organisations must also calculate the weekly hours of each employee. ‘Pay’ includes basic pay, allowances (such as a car allowance), pay for piecework, leave (such as maternity leave or sick leave), and shift premium pay. It also includes bonus pay referable to the relevant pay period, but overtime and redundancy or termination payments are excluded as is anything which is not money (such as benefits in kind). Organisations must review the bonuses which have been paid over the past twelve months ending on 5 April of each year (meaning anything paid from 6 April 2016 will have to be captured as part of the first report). Bonuses include anything which relate to profit sharing, productivity, performance, incentive and commission. Organisations will need to rank all of its full-pay employees in order of their rate of pay from lowest to highest and then divide this list into four equally sized groups, and must then report on the number of men and women in each quartile. Once gathered, the information must be
published on the organisation’s own website for at least three years and also uploaded to a government website (details of which are awaited). The report must also include a written statement confirming its accuracy. The first report needs to be published by no later than 4 April 2018 and annually thereafter. Where a pay gap is identified, organisations should consider providing an explanation as to the reason for any anomalies which may have led to the pay gap. The Equality and Human Rights Commission has stated they have the power to investigate and enforce compliance (by seeking a court order). In any event, a failure to report may lead to reputational damage both internally and externally. In anticipation of 5 April, it would be sensible for organisations to review current pay arrangements and ensure that the rationale for such arrangements is clear and transparent. In addition, a test calculation would be wise to identify any issues. While employers may fear that reporting will lead to equal pay and sex discrimination claims, publishing an identifiable pay gap does not necessarily mean that an organisation has an equal pay issue. The gender pay gap looks at average pay differences between men and women across an entire organisation. Equal pay claims focus on the differences between men and women who carry out the same jobs, similar jobs or work of equal value. Therefore, whilst the report may cause some employees to grumble, it is unlikely to provide a basis for litigation. However, helpful explanations in the report for any gender pay gaps are likely to help reduce the employees jumping to incorrect conclusions from the pay gap information provided. n
31
Issue 29 | April 2017
| Professional in Payroll, Pensions and Reward |
Made with FlippingBook - Online catalogs