Gender pay gap reporting
The regulations requiring big employers to publish data on their gender pay gaps came into effect on 6th April 2017, with the first reports being due in April 2018.
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 apply to private and voluntary-sector organisations with 250 or more employees.
The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 apply to public bodies with 250 or more employees.
Which employers are affected by the Regulations?
The private and voluntary sectors
The regulations cover any employer with 250 or more “relevant” employees in England, Wales and Scotland (but not Northern Ireland) on 5 April 2017 – and on the same date each year after that.
In companies with a group structure, each legal entity will need to report its data. There is no legal requirement on smaller employers to report data, but they are encouraged to do so.
Employers whose headcount varies will have to report in any year in which the headcount is 250 or more.
The public sector
The requirements for the public sector largely mirror those for the private sector but the public-sector requirements have been introduced as part of the existing public-sector equality duty, rather than as a stand-alone requirement, and the annual “snapshot” date on which the pay information is collected is 31st March for public sector employers, as compared to 5th April for private and voluntary sector employers.
Any authorities not listed as public bodies will be covered by the private and voluntary sector gender pay reporting regulations, as will private and international schools.
While the aim is to make the reporting requirements consistent across the public and private sectors, the public sector already has specific duties on equality, which the regulations have to reflect. There are also differences between the public sector equality duties in Wales and Scotland as compared to England, and it remains to be seen how these differences will work out in practice.
Public, private and voluntary sectors
Between them the two sets of regulations cover private, voluntary and public sector organisations across Britain. While there are slight differences in the regulatory framework for the public and private sectors, the measures of the gender pay gap are the same for all three sectors.
How is an employee defined?
The regulations apply the same definition of employee as the Equality Act 2010. This is a broad definition which includes zero hours’ workers, apprentices and some self-employed people.
Agency workers will be included in any reporting by the agency with which they have a contract of employment.
Employees will be covered by the regulations if they are employed on the relevant snapshot date, work mainly in England, Wales or Scotland, and are on full pay. Employees on reduced rates of pay while on maternity leave or sick leave are excluded.
How is pay defined?
‘Ordinary pay’ means basic pay; allowances; pay for piecework; pay for leave; and shift premium pay. It does not include overtime pay; redundancy pay; pay in lieu of leave, or non-monetary remuneration.
‘Bonus pay’ means pay in the form of money, vouchers, securities, securities options, or interests in securities; and pay that relates to profit sharing, productivity, performance, incentive or commission. Non-consolidated bonuses are also included.
What data must be published?
Employers are required to publish six metrics:
- The difference between the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees ( ‘the mean gender pay gap’);
- The difference between the median the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees (‘the median gender pay gap’);
- The difference between the mean bonus pay paid to male relevant employees and that of female relevant employees (‘the mean gender bonus gap’);
- The difference between the median bonus pay paid to male relevant employees and that of female relevant employees (‘the median gender bonus gap’)
- The proportions of male and female relevant employees paid bonus pay (‘the proportions of men and women getting a bonus’); and
- The proportions of male and female relevant employees in the lower, lower middle, upper middle and upper quartile pay band (‘the proportion of men and women in each of four pay quartiles’).
Calculations for the pay gap metrics are to be based on a single pay period around the “snapshot date” of 5 April (private and voluntary sectors) or 31st March (public sector), in each year, while bonus gap metrics cover the whole year up to the relevant date. The Regulations provide detailed instructions on how the figures should be calculated.
What format should the report take?
The data required from employers must be published in English, by April 2018 and annually thereafter. Employers have flexibility on when they publish their report, meaning that if they wish they can align in with other internal reporting processes.
Employers must publish the required data on the government’s gender pay gap reporting service website.
For private and voluntary sector employers, the information will have to be accompanied by a statement confirming its accuracy, signed by a director or equivalent, which includes their name and job title.
Once the report has been published on the reporting service website it automatically appears on the government’s viewing service website, where any interested person is able to access it. The viewing service website also lets people know if a report is late.
Employers must also publish their pay data on their own organisation’s website in a manner that is accessible to employees and the public and must ensure that it remains there for at least three years.
There is no requirement to publish any accompanying narrative or commentary, but many organisations will wish to explain what the figures mean. The ACAS/GEO guidance – see below – encourages employers to add a supporting narrative, as does the CIPD.
What are the sanctions for non-compliance?
Non-compliance will amount to an unlawful act falling within the enforcement powers of the Equality and Human Rights Commission, and as such, could attract unlimited fines. The Commission’s powers of enforcement are set out in the Equality Act 2006. You can find the Act here.
The Equality and Human Rights Commission aims in the first instance, to resolve non-compliance through correspondence with non-compliant employers. Where formal enforcement action is required, the Commission will take action as set out in its report Closing the Gender Pay Gap: Enforcing the Regulations.
The Commission encourages compliance through a range of activities including:
- Promoting awareness: This is achieved through a communications campaign targeted at employers, input into correspondence from the Government Equalities Office to employers, and, where appropriate, writing directly to employers.
- Education: This is achieved by providing information on the Commission’s website on what is required under the gender pay gap reporting regulations, signposting to other sources of information and advice, and providing guidance to employers during the initial resolution stage prior to taking enforcement action. The Commission also seeks to educate employers on the benefits of compliance by publicising work it has done with those employers who have taken steps to reduce disparities in pay.
- Monitoring compliance: Working with the Government Equalities Office, the Commission monitors which employers have published the information required and the accuracy of such information, with a view to holding non-compliant employers to account.
- Promotion of enforcement work: The Commission will promote the results of its enforcement work in order to encourage other employers to comply with the gender pay gap reporting regulations.
In 2018/19, the Commission aimed to initiate enforcement action against all employers who had not reported their pay gap data. The Commission has published an enforcement strategy setting out its powers and its intentions in relation to gender pay gap reporting.
The House of Commons Library has published a useful research briefing on the gender pay gap which includes an assessment of the Commission’s enforcement powers in relation to gender pay gap reporting.
Employers who submit data that has not been calculated in accordance with the gender pay gap reporting regulations will be in breach of the regulations and subject to enforcement action in the same way as those who publish no data at all. While the Equality and Human Rights Commission initially intends to drive up reporting by focusing on employers who do not publish any data, it has the means to identify employers who submit statistically improbable data and will consider taking action against them.
If a private or voluntary sector employer does not comply after the Commission’s initial correspondence, it will carry out an investigation into whether they have committed the suspected unlawful act, that is, a breach of the gender pay gap reporting regulations.
A similar process will apply to public sector organisations – see the research briefing on the gender pay gap for more information.
Guidance on gender pay gap reporting
ACAS/Government Equalities Office
The Government Equalities office and Acas have produced joint guidance on gender pay gap reporting. You can find the guidance here.
There is a separate mini guide on the public sector, which you can find here.
You can also find a factsheet on obligations for employers here and one on the top ten myths here.
CIPD
The most comprehensive guidance is that published by the CIPD. You can find the guide here. It is currently being updated.
You can also listen to a podcast on gender pay gap reporting here.
Government Equalities Office
The Government Equalities Office, jointly with the CIPD, has issued a guide for employers on actions to take to close the gender pay gap. These include ensuring open recruitment, introducing flexible working at all levels, supporting staff with caring responsibilities, and checking that you are paying staff fairly. The guide also recommends that you:
- Calculate and publish your gender pay gap information, as required by law
- Analyse your data to learn where you can achieve the biggest improvement
- Commit to an action plan
- Monitor your progress
You can find the guide here
Is there guidance for employees?
There is no guidance for employees, but employees are encouraged to look at their employer’s gender pay gap figures.
The Government also provides an online tool that allows the public to find out the gender pay gap for their occupation as defined in the standard industrial classifications used by the Office for National Statistics. For more on this go to Tools.
The Business, Energy and Industrial Strategy (BEIS) Committee
In the summer of 2018 the Business, Energy and Industrial Strategy (BEIS) Committee held an inquiry on executive pay and gender-pay gap reporting in the private sector.
The Committee looked at these issues in the context of concerns about the overall level of executive pay and bonuses and in the light of the recent deadline of 4 April 2018 for gender-pay gap reporting. The Committee published its report on 2 August 2018. In summary, the Committee said that:
- The first year of gender pay gap reporting shows that gender pay gaps of over 40 per cent are not uncommon in some sectors; 78 per cent of organisations reporting have gender pay gaps in favour in men. 1,377 employers (13 per cent of the total), including many household names, have gender pay gaps of over 30 per cent.
- The gender pay gap must be closed, not only in the interests of fairness, but in order to improve the country’s economic performance.
- The penalties of working part-time, both financial and in terms of career progression, are a major contributory factor to the continuing failure to fully utilise the talents of women.
- The new figures expose, business by business, how men dominate both the highest paid sectors of the economy and the highest paid occupations within each sector. While there are other contributory factors, which must be addressed on a coherent cross-departmental basis, businesses must also take responsibility for the impact of their own policies, practices and culture. The Committee believes that businesses have an obligation, not just to reflect change, but to drive it, and calls for business leaders to be held to account where they are not showing the necessary degree of effectiveness.
The Committee called on Government:
- To require organisations to publish, alongside the bald figures, an explanation of any gender pay gap and, most importantly, an action plan for closing the gap, against which they must report progress each year, as part of normal reporting requirements.
- To widen the net of organisations required to publish gender pay gap data to those with over 50 employees.
- To alter the reporting requirements and improve the quality of the guidance on how to calculate the figures.
- To publish and maintain a definitive list of all organisations falling within the scope of the Gender Pay Gap Regulations.
In spite of some teething problems around the clarity of reporting requirements and the accuracy and timeliness of the data provided, the Committee concluded that overall, compliance was very good. This was partly owing to effective enforcement by the Equalities and Human Rights Commission. Nonetheless, the Committee found that the Government was remiss in failing to clarify the legal sanctions available to the Commission to pursue those failing to comply and recommends that the Government rectifies this error at the next opportunity.
The Committee intends to monitor the role of Government and businesses in translating this new transparency into a marked acceleration in the pace of change.
You can read the full report here, and the conclusions and recommendations here.
The Government’s response to the BEIS Inquiry
In January 2019 the Government published its response to the BEIS Report. All of the Committee’s recommendations have been rejected, seemingly on the grounds that it is only a short while since the Government carried out its own extensive consultation on the regulations.
You can read the Government’s response here.
What’s coming up?
The government has already committed to extending pay gap reporting to ethnicity. For more on this go to Beyond Gender.
In June 2019 the Government Equalities Office advised the Treasury Select Committee that the Government is considering extending gender pay gap reporting to employers with fewer than 250 staff.
The next scheduled review of the regulations will be in 2022, but proposals being discussed for implementation before then include requiring employers to submit more information on their policies to close their gender pay gap and requiring them to provide more data, for example on maternity leave and job tenure.
Consideration is also being given to whether the EHRC’s powers to enforce the rules should be enhanced. Companies might be required, for example, to include gender pay gap data in their annual reports, which would mean the information would be audited. While any changes would be the subject of public consultation, it would be prudent to bear these potential developments in mind.