From 6th April 2017, large employers are under a responsibility to produce and publish a yearly report on their gender pay gap. The requirement only affects companies with 250 or more employees and there are concerns that businesses are not aware of their obligations. Employers need to understand the specific calculations which are required to be contained in the report to ensure they are fully meeting the requirements.
Employers must publish results using data taken on the snapshot date of 5th April 2017. There is no leeway with this date so it is important this isn't missed. Data needs to be collected on the hourly pay and bonus payments paid to full pay employees who are employed on the snapshot date.
The regulations contain specific calculations which must be included in the published report. The majority of these focus on the mean, the average, and the median, the middle figure. The first calculation employers need to determine is the median and median hourly pay for male and female employees and the difference in mean hourly rate of pay for male and female employees expressed as a percentage. The hourly pay is determined as ordinary pay which includes basic pay, allowances, pay for leave and shift premium pay. It does not take into account any overtime pay, redundancy pay, settlement pay or pay in lieu of leave.
The next required calculation is the difference in mean and median bonus pay for male and female employees expressed as a percentage. Bonus pay relates to any pay in the form of money, vouchers or securities and securities options. It will cover amounts relating to sharing profits, productivity, performance, incentive or commission paid to the employee. A further requirement for bonus pay is to calculate the proportion of female and male employees who receive bonuses in the business. This will be a useful indicator of whether the gender pay gap is created, in the main, by bonuses alone.
The last requirement is to report on the number of men and women in each quartile of the pay distribution, shown as a percentage. Quartiles split the total workforce in to four equal sections according to the average hourly pay, starting from lowest paid to highest paid, and will allow employers to see the gender spread across the pay bands.
Alongside the required calculations, employers have the opportunity to provide contextual information on a voluntary basis. Even though this isn't necessary, employers should seriously consider providing the extra information as a way of explaining the results contained in their report. An explanation will be essential if the results show a large gender pay gap and employers should set out the steps they are taking or will take, to tackle the gap in their business. As reports have to be publicly published, the extra information could go a long way towards reducing any reputational damage the results may cause.
The report has to be published within a year of the snapshot date, i.e. by the 4th April 2018. The report must be placed on the company's website so that it is accessible to employees and the public for a minimum of three years. A written statement, signed by a director or senior employee, confirming the accuracy of the report also needs to be published. The details will also need to be uploaded to a government website.Suggest a correction