Gender Pay Gap Information Regulations to affect 8,000 employers
Employers need to act without delay in considering how to comply with incoming gender pay gap regulations, according to Bond Dickinson LLP.
The draft Gender Pay Gap Information Regulations 2016 require large employers to publish their gender pay gap information by April 2018. There is, however, little time for employers to plan ahead, according to Bond Dickinson, as a result of the fact that the gender pay information required to be published is based on payments made well before this date.
The Regulations require the gender bonus gap to be calculated using bonus payments made between April 2016 and April 2017 and yearly thereafter. There is currently a national average gender bonus gap of 57%, and as bonus payments are widely defined and are also included in the assessment of the gender difference between hourly rates, it seems likely that there are significant numbers of employers at risk of an equal pay challenge.
The theme of this year’s International Women’s Day on 8th March is global gender parity, which aims to help highlight the issue and encourage employers to act now in considering how best to comply with this significant requirement, says Bond Dickinson.
Lorraine Heard, legal director at Bond Dickinson LLP, said, “International Women’s Day has thrown even more light on the issue of gender parity. The introduction of mandatory gender pay gap reporting will force employers to be up front about gender related pay and either explain the differences they uncover or risk costly equal pay claims.”
The Regulations, due to come into force on 1st October 2016, will affect approximately 8,000 employers who, between them, employ around 40% of the working population. Recent research from Bond Dickinson LLP found that while only 16% of employers are worried that current differences in employee pay may be due to gender, 70% are concerned that the Regulations mean employees will question their rate of pay.
The regulations will see the publishing of five different elements:
- Difference in mean pay
- Difference in median pay
- Difference in mean bonus payments
- Proportion of men and women who receive bonuses
- Gender pay split between quartile pay bands
Bond Dickinson state that employers will need time to investigate the reason for a high gender pay gap and consider how to present their results on the Government-sponsored website where the information is to be uploaded, and where it will be available to all for consideration and comparison.
Heard added, “The best preparation for the publication of gender pay gap details is to gain an in-depth understanding of pay differentials within the organisation and the reasons for them. Being able to explain a pay differential in a way that is consistent with the relevant legal requirements could mean the difference between avoiding reputational damage and spending in excess of five years defending equal pay claims.”
Bond Dickinson recommends the following action points for employers:
- Be proactive – understanding pay arrangements will help employers manage and present information meaningfully and in context
- Calculate and consider gender pay gaps that exist on a departmental / geographical / functional level and compare these with the composition of the workforce.
- Compare the results with the national figures produced by the Office for National Statistics, and those for the sector in which the employer operates.
- Analyse the rationale behind the current arrangements to identify potential risk areas and action that may be taken to address the situation
- Consider how best to present the information.