The Government Equalities Office has launched its anticipated consultation on mandatory gender pay reporting.
This follows the Coalition Government’s decision to implement section 78 of the Equality Act 2010, which requires large employers to publish information on their gender pay gap.
Regulations setting out the detail of new requirements should be finalised by Spring 2016, but the Government is proposing delaying their commencement to give businesses time to prepare.
Let’s start with the why…
…and with a positive. The gender pay gap for all employees, as calculated by the Annual Survey of Hours and Earnings, is at its lowest since records began in 1997 at 19.1%. For full-time employees, it has narrowed to 9.4%. However, this is still a significant gap and the Government has taken the view that progress needs to be speeded up. It thinks that transparency about the gender pay gap will accelerate change.
Then the who…
The new law is likely to affect employers in the private and voluntary sectors with at least 250 employees (although the Government is looking at whether this is the correct threshold). Employees are those employed under a contract of employment, a contract of apprenticeship or a contract personally to do work.
Moving onto the what…
Affected companies will be required to publish information about their gender pay gap. Note that this is not the same as unequal pay, which is unlawful under the Equal Pay Act. Rather than signifying unequal pay, a gender pay gap shows the difference between average earnings of men and women. There may be many underlying reasons for a gender pay gap in your business which do not relate to equal pay, for example in manufacturing, one reason may be the relatively small number of female apprentices and female engineering graduates.
The consultation asks for views on how the gender pay gap should be measured and for information about how you are currently able to calculate your gender pay gap. Options are: one overall gender pay gap figure capturing the difference between the average earnings as a percentage of men’s earnings; breaking down figures to show the gender pay gap for full-time and part-time employees separately; and calculations which show the difference in average male and female earnings by grade or job type. Also relevant is whether gender pay gap information should be directly comparable between different employers.
Many employers will want to contextualise published figures with some additional narrative and explanation. The Government is asking how prescriptive they should be about the content of any such narrative.
What about the where….?
The Equality Act requires that the information be ‘published’, but it does not specify how (or where) this should take place. The consultation seeks views on this. For example, should you be required to put the information on your website? The consultation also asks for any alternative suggestions to increase transparency on gender pay, for example reporting to Government via the existing PAYE system.
And the when…?
The consultation asks how often the required information should be published, for example every 12 months, 2 years or 3 years?
The consultation also asks about the cut off period for any reporting period. Should it be 1 January, 6 April, 1 October, the year end date for each business or another date?
And the consequences of breach…?
The Government is seeking views on appropriate enforcement procedures to ensure compliance.
And finally, what else might help close the gap?
The consultation also covers other ways in which the Government is seeking to close the gender pay gap, which are beyond the control of individual employers, such as how to encourage young girls to consider the broadest range of careers, how to support women’s careers after having children and how to assist older women in the workplace.
Have your say
The consultation closes on 6th September 2015. EEF will be consulting widely with members and hosting a number of bespoke focus groups with members to discuss the consultation and the new requirements. At some of these we will be joined by government officials who will be on hand to assist you with your understanding of the proposals and listen to your views.
If you would like to attend any of the EEF focus groups, or need further information, then contact Tim Thomas or Verity O’Keefe.
Find out more
EEF will be delivering a free webinar for members and non-members, Mind the gap: gender pay reporting made easy on 26 August 2015. Click here for more information and to book.
We will also be covering this topic at our Autumn Employment Law Updates.
Understanding pay differences in your business
Whether or not your company will be affected by the new gender pay reporting obligation, you may want to take steps now to assess and analyse any gender pay imbalance in your business. Doing so early may give you a helpful benchmark against which you can monitor your progress and will give you the chance to make changes before you are obliged to publish gender pay information. If you would like to speak to a member of our HR consultancy team about this please contact Jason Morris or Jo Parker