Employers with 250 or more employees are now required to publish figures showing the pay gap between their male and female employees. Employers must publish these figures annually both on their own website and on a dedicated government website. A nominated senior executive within each business must personally sign off on the accuracy of the figures.
Employers must show:
- Gender pay gap as a mean average
- Gender pay gap as a median average
- Bonus pay gap as a mean average
- Bonus pay gap as a median average
- Proportion of male and female employees receiving a bonus payments
- The workforce split into quartiles, based on pay, showing the proportion of men and women in each quartile
The role of narrative
Whilst it is not obligatory, employers also have the option to submit an accompanying narrative to support their gender pay gap figures. This allows them to place the data in context and to provide an explanation of the causes of any gaps. Employers can also outline any steps they are planning to take or they have already taken to address any gaps, along with any progress made to date.
There are very limited direct legal risks flowing from the reporting obligations. Failure to report is ‘an unlawful act’ and the Equality and Human Rights Commission (EHRC) can take enforcement action (s34 of the Equality Act 2006). They may open an investigation if they suspect a considerable pay gap is being hidden by employers. However, it is clear that the real risk for any employer will be reputational. As the information will be publicly available, the risk is that employers who fail to comply, or whose data displays significant pay disparities, will be named and shamed. An additional outcome for employers is that the data may be used to support equal pay cases if it shows that men and women are not receiving equal pay for equal work.
How we can help
Addressing the gender pay gap is about more than just reporting your statistics. As highlighted above, the narrative will play an important part in explaining the data, and the steps being taken to address any issues arising. With a proper understanding of the underlying data and a clear plan the potential impact on reputation, recruitment and retention can be minimised.
We can help our clients get ready for their gender pay reporting by:
- Assessing whether they are in scope;
- Advising on difficult issues in calculation, such as treatment of non-standard employees, or impact of long term incentive plans;
- Carrying out confidential and privileged gender pay gap audits based on clients' anonymised data;
- Producing reports, illustrating the figures in an easily digestible and visual format and advising on the issues and legal risks arising;
- Reviewing the wording of any proposed narrative;
- Advising on any additional analysis and other solutions to help address the gap and create value for your business.
The extended version of this video is available here.
Equal Pay has been on the statute books since the Ford Dagenham Seamstresses took up the gauntlet and won in the late sixties. However, until recently Equal Pay had been the viewed as the poor relation on the battleground of pay disputes.
Equal pay is about ensuring men and women are paid the same for equal work meaning like work, work rated as equivalent, or work of equal value. Whilst Equal Pay claims frequently go hand in hand with wider sex discrimination complaints, they are less common because they are limited in scope to purely contractual pay and benefits – basic pay, holiday pay, car allowances and rare contractual bonus/ commission schemes.
The introduction of mandatory gender pay gap reporting pay may lead to resurgence of interest in this area. Certainly, the publication by employers of data showing significant gender pay gaps will inevitably fan the flames in this direction.
We advise both employers and employees on perceived contractual inequalities relating to often highly complex pay and reward schemes. Our focus remains on identifying issues early and seeking to resolve them without recourse to litigation where possible.