Draft regulations on gender pay reporting published

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The government has published draft regulations requiring employers to publish details of their gender pay gap. There is to be further consultation on the draft regulations.

Today’s developments

Compulsory gender pay reporting came a step closer today with the publication of draft regulations to require employers to publish a range of gender pay metrics.

The Draft Regulations – key provisions

The draft regulations would require employers with 250 or more employees to publish the following details on their website:

  • Gender pay gap  (gap between average male hourly pay and average female hourly pay, putting all UK employees, of all grades and job types, into the calculation)
  • Gender pay gap in bonuses
  • Proportion of men and women who receive a bonus
  • Numbers of men and women falling within each quartile of pay in the workforce

Employers would calculate the gender pay gap by taking a snapshot of male and female pay in April each year. They would use a pay period (e.g. month or week) which includes 30th April. Pay would include basic pay, shift premium, variable allowances and bonuses, as long as they are paid for the relevant pay period. Pay would not include benefits or overtime (there may be grey areas). The calculation involves looking at average hourly rates for all UK employees: this will include your Executive Directors but not self-employed contractors. There are different ways of calculating averages, and the draft regulations would require employers to publish both the mean and the median figures for the overall hourly gender pay gap.

As predicted, employers will have to publish a separate report on bonuses. This would involve looking at bonuses received by men and women in each year (including commission, performance-related bonuses, LTIPs and the cash value of shares). Employers would then have to publish the gender pay gap in the mean figures (not the median).  Employers would also have to publish the proportion of men and women who got bonuses.

Employers would also need to report on the numbers of men and women falling within each quartile of pay in their workforce. Employers would take a snapshot on 30th April each year.

A director would need to sign off the figures. Employers would then need to publish the figures on their website and upload them to a government-sponsored website. The details must stay on the website for three years, in order to show trends. 

The Regulations would give the Secretary of State the power to publish reports. The Government has separately suggested that it wants to publish league tables by sector.

Publishing an explanation for your figures

Most employers will want to publish an explanation of their gender pay gap figures, to set them in context, explain the causes, make comparisons or set out their commitments to gender pay equality.  Some employers may want to publish additional metrics. The draft regulations published today make clear that any additional metrics or additional explanation is voluntary, and would not be required by legislation.  We expect all employers will want to at least consider publishing more than the required figures to put their business in the best light.

Timing

The regulations would come into force in October 2016.

Employers would have to calculate their first overall gender pay gap figures for the first time using their April 2017 pay data. For the bonus figures, this would involve looking backwards to include all bonuses paid from 30 April 2016 to 30 April 2017.

However, employers will have until 30 April 2018 to publish all of the required figures on their website.

Consultation

The consultation remains open until 11 March 2016. EEF will be responding to the consultation and will be seeking input from employers. To help shape our thinking and influence this key policy area please contact Tim Thomas.

EEF support

EEF will be running a series of seminars in September to help you get to grips with the requirements and consider your approach. By this stage, the Regulations should be finalised and the consultation concluded. We will be explaining in more detail how to calculate the metrics which must be published, exploring what other metrics or supporting explanation you might consider publishing alongside the required figures and ways to address any potentially negative consequences. For more details and to book your place, click here….

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