The final Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (“the Regulations”) are expected to come into force on 6 April 2017, subject to Parliamentary approval. The Regulations provide that employers of a certain size will be required to publish information regarding the gender pay gap within their organisation.
WHY HAS IT BEEN INTRODUCED?
The government has introduced these measures as part of a conscious effort to tackle the gender pay gap and to promote pay transparency within organisations. It is hoped that addressing any disparity in pay might encourage employers to fully capitalise on the talent and experience of female employees, which would be in the interests of the individuals, the employer and the wider economy.
WHO WILL IT AFFECT?
Private and voluntary sector employers with 250 or more employees in England, Wales and Scotland will be required to publish gender pay information.
Under the Regulations, the definition of “employee” covers individuals that are employed under a contract of employment, a contract of apprenticeship or a contract personally to do work. Consequently, casual workers or bank staff who are engaged directly by a relevant employer will fall within the scope of the Regulations. This would include workers engaged under an umbrella contract or a zero hours contract.
The Regulations specify that self-employed workers will be exempt where it is not reasonably practicable to obtain this data. Employers will not be required to include information relating to an individual who is employed under a contract personally to do work if the employer does not have the information and it is not reasonably practicable to obtain the information.
WHAT WILL NEED TO BE REPORTED?
Employers will need to publish:
- the difference in mean and median pay between male and female employees;
- the difference in mean and median bonus pay between male and female employees;
- the proportions of male and female employees receiving bonuses; and
- the number of male and female employees in each quartile pay band.
Employers will be able to provide a voluntary narrative report to explain any pay gaps and to set out any intended remedial steps to be taken to narrow the gap. This will be encouraged in the guidance accompanying the final Regulations.
WHERE SHOULD THIS INFORMATION BE PUBLISHED?
The gender pay gap information should be published on employers’ websites and it should be retained online for three years in order to show the progress employers have made to address any pay gap issues.
Employers must also upload the information to a Government website.
The information must be presented in a manner that is accessible to all employees and the public.
Where employers do not have their own websites (for example, where there is an employing entity within a corporate group), it has been suggested that the employer may want to create a separate webpage for their gender pay gap information, or publish a website hosted by its parent company.
A written statement of accuracy must accompany the required information and it must be signed off by a senior individual, such as a director in respect of companies and other bodies (except LLPs).
HOW OFTEN WILL THIS INFORMATION NEED TO BE PUBLISHED?
Employers will be required to publish gender pay gap information annually. The first snapshot date will be 5 April 2017 and employers will have 12 months from that date to publish the information.
WILL THERE BE PENALTIES FOR NON-COMPLIANCE?
The government has decided not to impose civil penalties for non-compliance with the Regulations. However, it has indicated that it will run periodic checks to assess for non-compliance; produce tables by sector of employers’ reported gender pay gaps; and highlight and identify employers publishing particularly full and explanatory information. Non-compliance with the Regulations may trigger reputational damage, which may be of significant concern to employers.
ADDITIONAL REGULATIONS TO TAKE EFFECT ON 31ST MARCH 2017
In addition, the government has now published The Equality Act 2012 (Specific Duties and Public Authorities) Regulations 2017, which extend the duty to publish annual gender pay gap reports to public sector employers with over 250 employees. These generally reflect the Equality Act 2012 (Specific Duties and Public Authorities) Regulations, however the main differences between the two sets of Regulations are:
- The public sector duty takes effect as part of the existing public sector equality duty, rather than as a separate requirement; and
- The snapshot date is 31 March for public sector employers, not 5 April as it is for employers in the private sector.
WHAT SHOULD EMPLOYERS DO NOW?
Public, private and voluntary sector organisations, employing 250 employees or more, will need to start making preparations in advance of the implementation of the Regulations.
Employers will need to consider which individuals will be caught by the Regulations; decide how to capture the relevant information efficiently; collate the information; and consider how to deal with any potential equal pay issues and issues regarding bonus arrangements, perhaps by introducing new processes or systems. If any particular issues are highlighted during the information-gathering process, it may be worthwhile to carefully consider the content of the narrative accompanying the gender pay gap information well in advance of publication.
Employers should also be aware of the risks of the reporting obligations; it may have an impact on employee engagement and retention and it may lead to potential financial damage as a result of future equal pay claims.