New regulations regarding the gender pay gap
6th September 2017
The BBC found itself in a media storm recently following the publication of salaries paid to its highest-earning stars, which revealed that only one-third of its 96 top earners were women, and the top seven were all men. Since then, staff at the Financial Times have threatened to strike over the paper's reported 13 per cent gender pay gap.
It is an issue that is likely to keep on drawing attention, now that larger employers are obliged to publish their gender pay gap information. The Equality Act 2010 (Gender Pay Gap Information) Regulations came into force on 6 April and some organisations are already publishing their results.
The Regulations apply to all private, public and voluntary sector organisations with 250 or more employees, who must publish details annually of their gender pay gap, for both basic pay and any bonus payments, with first reporting due no later than 4 April 2018. The information must be published electronically on their own website and on a dedicated government space.
The aim is to measure differences between the average pay of men and women in an organisation as well as whether men and women are receiving equal pay for equal work. The figures will show the distribution of men and women at different levels across the organisation, highlighting whether an organisation is promoting or appointing women into more senior roles, or whether men are dominating the higher-paid jobs. If so, then the organisation will have a gender pay gap, even if men and women are paid equal pay for equal jobs.
Although this will provide greater transparency, it will not provide the sort of detail published by the BBC, which was required to publish the names and salaries of its high earners under its new Royal Charter, to demonstrate its stewardship of public money.
However, implementing the new Regulations is likely to be resource-hungry, with internal systems needing to be configured to generate the figures. Some organisations may find themselves wanting to provide a more detailed analysis if they feel the headline information does not give the full picture ??" for example by breaking down the overall pay gap figure by part-time working or geographical location.
An organisations' corporate reputation is likely to take a hit if their pay gap proves to be on the wrong side of the national average of 18.1 per cent. Therefore, it is worth getting the information together now, rather than waiting for the deadline, as that will allow time to review the current position, look at underlying causes and put steps in place to address any issues. Future strategy can be addressed in the written statement that must accompany the statistics.
Figures must be calculated using the 'snapshot date' which is 31 March for public sector organisations and 5 April for businesses and charities, and the data must be published within a year of the snapshot date, meaning the deadline for companies to publish the first year's data is 5 April 2018.
If a significant pay gap is revealed by a company, female employees could challenge why their pay is different from that of male colleagues. If the difference cannot be justified, there could be grounds to claim gender-based discrimination.
The data to be published is:
• mean gender pay gap in hourly pay
• median gender pay gap in hourly pay
• mean bonus gender pay gap
• median bonus gender pay gap
• proportion of males and females receiving a bonus payment
• proportion of males and females in each pay quartile
The accuracy of the data must be confirmed in a written statement signed by an 'appropriate person' in a senior position, such as a director or partner.
In terms of enforcement in the case of any organisations that defy the Regulations and do not publish any information at all, the sanctions are not as clear as they might be and are general rather than specific. No sanctions at all are mentioned in the actual Regulations but the explanatory note published at the same time states that the Equality and Human Rights Commission will have powers to enforce, as failure to publish will be seen as an "unlawful act". The statutory basis for this is set out in paragraph 20 of the Equality Act of 2010. Again, the reputational consequences in these circumstances are likely to be of a far greater impact.
Web site content note: This is not legal advice; it is intended to provide information of general interest about current legal issues.