The government has recently unveiled new plans calling for Employers with 250 or more employees in the private and voluntary sectors to publish gender pay gap information by April 2018. Whilst that may seem a long way off, the period from which the data is collected may be as early as the year preceding April 2017 for bonus payments.
The draft regulations will form part of the Equality Act 2010 and will require Employers to publish information on:
- the difference in mean pay between male and female employees;
- the difference in median pay between male and female employees;
- the difference in mean bonus pay between male and female employees;
- the proportion of male and female employees who received bonus pay; and
- the number of male and female employees in each quartile of their pay distribution.
It is worth noting that overtime payments and the value of salary sacrifice schemes will not be included in the reporting at this stage.
The idea behind the regulations is that by making the publishing of data compulsory, it will result in a reduction in bias and improve transparency within organisations, therefore narrowing the gap between the pay of male and female employees.
The draft regulations have set a date of April 2017, by this time Employers should have calculated a snap-shot of what employees are being paid and will be required to publish their findings in April 2018.
Employers will be required to publish their gender pay gap reporting information on their websites accompanied by a statement confirming that the information is accurate. This information will need to remain for 3 years to allow for comparison. In addition to this, the data will also need to be published on a government sponsored website.
The introduction of these measures is likely to result in increased transparency, however there are a number of potential risks for employers.
Whilst the draft regulations don’t include any sanctions for non-compliance, an organisation that does comply with the duty may be more attractive to potential employees. In addition to this, the government may publicly name employers that have not published their data.
If there are significant differences in pay, then there could be substantial damage to the reputation of the business and this could affect factors such as recruitment and retention. In addition to this, potential equal pay claims could arise which could have significant financial implications.
Separate legislation will be put in place for employers within the public sector and it is suggested that it will become mandatory for them to publish their gender pay gap information.
Preparing for gender pay gap reporting
Whilst the regulations have not yet come into force, employers could still be looking at ways in which they can prepare.
A helpful first step would be to establish the means of gathering the information and ensuring that there are appropriate reporting tools in place to get relevant information from the data.
In addition to this, you could carry out an informal equal pay audit. A job evaluation scheme would also be a useful tool when considering if employees are carrying out equal work. Doing this will help to identify any potential inequalities and allow employers to put a plan in place to tackle this.
If any pay gaps are identified, the key is to then establish the reasons behind these gaps and to ascertain if these are genuine reasons. When preparing for this change it is essential that employers understand their pay processes and apply these consistently.
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