Government publishes draft gender pay gap reporting regulations

The government has published long awaited details of the proposed Equality Act (Gender Pay Gap Information) Regulations 2016 as part of its ongoing commitment to addressing gender inequality in the workplace.

With the Regulations predicted to affect over 7,000 employers across the UK, this is likely to be one of the biggest changes to UK employment law this year.

The Office for National Statistics has reported that in 2014 female employees working full or part time in any occupation were paid on average less than 19.1% than men. These startling statistics demonstrate that gender inequality is still very much alive.

What do the Regulations means for employers?

The Regulations (currently in draft form) will make it mandatory for employers who employ 250 or more employees to publish information relating to pay in order to show whether or not there are any differences between male and female employees.

Under the Regulations employers will:

• be required to publish average gender pay gap figures (using both mean and median calculations);
  
• be required to report on the number of men and women working across salary quartiles (based on the employer’s own overall pay range);
  
• be required to separately analyse and publish details of bonus payments; and
  
• be encouraged (but not required) to publish additional narrative to explain the results or to provide some context.
  

The above information will need to be published, together with a statement confirming its accuracy, on an annual basis on a UK website accessible to the general public.

The Regulations are intended to come into force on 1 October 2016 and employers will be required to publish the first set of figures within the following 18 months.

What do employers need to do?

There is no getting away from the fact that the Regulations, if implemented in their current form, will impose significant additional requirements on employers which will of course come at a cost. The Regulations are likely to require employers to spend time and money in understanding them, implementing staff training as well as collating and publishing all of the necessary data.

Employers should also be aware that the government may publish the names of those employers who fail to comply. It is therefore important that employers ensure compliance in order to avoid what could result in serious reputational damage.

It would be advisable for employers to get ahead of the game if possible, and to see if they anticipate any problems being revealed by the figures. If they do, implementing an action plan so employers can demonstrate that they are tackling the problem may assist in at least reducing the adverse publicity.

The Regulations are not necessarily all bad news. The reporting requirements will enable employers to identify any inequalities within their business and to amend their existing policies and procedures to ensure a clearer link between performance and remuneration. There is evidence to show that a diverse workforce performs better; demonstrating a commitment to equality is also likely to increase employee morale.

Employers should ensure that they are aware of the changes proposed by the Regulations, that they take appropriate measures to ensure compliance with them and that they take full advantage of the opportunities presented by them.