Gender Pay Reporting

The Government have announced that new regulations will be introduced by Spring 2016 (no date has been given yet) which will require private sector and third sector employers with 250 or more employees to publish their gender pay gap. Mandatory reporting is expected by April 2017.

The draft regulations require employers to:

• Publish overall gender pay gap figures calculated using both the mean and the median average. The “mean” is the “average” calculated by adding up all the numbers and then dividing by the number of numbers. The “median” is the “middle” value in the list of numbers. The median is thought to be the best representation of the typical difference between the genders as it is not distorted by a small number of very high earners.
• Report on the number of men and women in each of four salary quartiles, based on the employer’s overall pay range. This is meant to show how the gender pay gap differs across the organisation, at different levels of seniority.
• Exclude overtime payments from the calculation.
• Publish separate information on the gender pay gap relating to bonuses. The regulations only require the mean bonus payments to be analysed separately, not the median.

Employers will have the option to include a narrative explaining any pay gaps and setting out what action they plan to take. The provision of a narrative will be strongly encouraged in the guidance accompanying the new regulations, but it will not be mandatory, as the Government feels this would be overly burdensome.

One obvious thing missing from the draft regulations is any enforcement mechanism. The Government believes that the very fact that the information is published will mean that employers will comply, but have indicated that if that is not the case then enforcement mechanisms will be introduced.

This development has implications for employers beyond the risk of equal pay claims. Their gender pay gap, and how they present and address it, may affect their brand, their reputation and their ability to recruit and retain staff. 

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.