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How the changes to gender pay gap reporting will affect you

New Gender Pay Regulations come into force in April – so how will they affect your business?

The final Gender Pay Regulations have now been published and come into force on 5 April 2017.

The objective was to introduce an obligation for businesses operating in the UK who employ 250 or more employees to publish details of the percentage pay gap and percentage bonus gap between male and female employees on their own website within a year.

However, more employers will now be required to analyse their data and publicly state the difference in pay and bonuses.

What’s changed?

Originally, businesses with more than 250 employees on 5 April 2017 were required to report their pay gap. The scope has been extended to all business staffed by 250 or more people on that “snap-shot date” – whether employees, contractors doing the work personally or agency staff working under an umbrella contract. Only the genuinely self-employed are clearly excluded. 

Analysing the relevant staff numbers on 5 April and their arrangements will take time and effort – and that’s before you even start assessing if there is a pay gap. It’s even more difficult where written terms are not commonly held in a central location.

Each business in a group with 250-plus staff will now have to do an individual report of their pay gap. It was initially contemplated that a single report could be made at group level covering the pay gap in each of the group companies in one report. That shortcut has gone.

It is uncertain whether employees who work outside Great Britain will now count towards the 250 employees that trigger the publishing obligation. Employees working abroad were originally excluded from the scope of the gender pay reporting, but that exclusion has been removed.

By 4 April 2018, every business caught by the regulations will be legally required to disclose its pay gap on its own website and to report the information to the government. Typically, pay, bonuses and allowances are a confidential matter – shift premiums, on-call allowances and standby allowances still will be.

However, from 4 April 2018, any reasonably large employer will have to publish these figures. The information must be published with a statement of accuracy signed by a director and must be made publicly available for three years.

The figures are calculated according to the regulations:

  • The percentage difference in hourly pay between full-time male and female employees (based on the mean and median);
  • The percentage difference in bonuses between full-time men and women;
  • The number of men and women that receive a bonus; 
  • The gender split in four equally-sized quarters of the business.

The good news for employers is that the guidance issued indicates the government will not be seeking to name and shame employers that fail to publish the data. On the contrary, the intention is now to identify (and presumably praise) compliant businesses.

What difference will this make?

More business will now be caught by the regulations and have to collate and publish their pay data.

Compliance will be an unwelcome and time-intensive obligation that is likely to be required in any tender process. It is likely that across all sectors, employers who fail to publish or have large disparities in their data will be highlighted by unions and employee groups.

For businesses in male-dominated sectors like construction, the disparities are likely to be more stark. We therefore advise that an explanatory note demonstrating the efforts being made is added to the report.

Some critics fear the regulations will increase workplace stereotypes and disparity by deterring women from entering sectors where they are already under-represented.

Positive results?

Equally, employees and prospective employees will be acutely interested in the results – it will attract and discourage even if the differences are explainable. Few will use the data to bring tribunal claims but many may question the percentage differences.

On a more positive note, most businesses have been proactive and have prepared for these new obligations by analysing pay bands and adjusting salaries. That work will now pay off as the pay differential is scrutinised and those businesses can outshine their competitors by demonstrating their diversity and transparency.

The disclosure of information to the general public can enhance the brand and reputation and impact positively on its recruitment and retention, so there is an opportunity in complying too.

Melanie Stancliffe is employment partner at Irwin Mitchell

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