8th June 2016
An Office for National Statistics report found that women earn around 19.2% less than men, on average, in the UK. To help address this issue, the Government has proposed legislation for businesses to publish the difference between the average pay of their male and female employees. This, they state, will help provide “stronger incentives for women to work and advance their careers, which might in turn lead to a more diverse and equal workforce”.
Gender pay reporting will apply to employers with 250 or more UK employees. This will include LLPs, partnerships, companies, unincorporated bodies or other types of employing entity. This is likely to affect around 960 businesses and 11.3 million employees.
What is Being Reported?
Employee pay must be reported to demonstrate any differences between male and female pay. This includes a range of remuneration, including the mean and median pay gap figures, but there are some exceptions.
You Won’t Need To Report…
- overtime pay
- salary-sacrifice schemes
- redundancy pay
- benefits in kind
- pay in arrears
- pay for a different pay period
- tax credits
Bonus payments made over a 12-month period will be featured in a separate analysis. Bonus pay includes profit-sharing schemes, performance bonuses, incentive pay and commission. This data must be analysed and reported in the same manner as normal pay reporting.
The figures themselves will not be published. Instead, the percentage difference between male and female employee pay will be shown to demonstrate the extent of any gender pay gaps.
At this time, the Government has not set out any civil penalties for non-compliance. However, they will run periodic checks to assess for non-compliance. However, it is planning on naming and shaming those employers that are non-compliant. The Government will also produce tables that show the worst gender gap offenders, divided by business sector. This strategy of naming and shaming is likely to have knock on effects for businesses with the biggest pay gaps.
Use Your Narrative
The Government is encouraging businesses to provide a narrative along with the disclosed data. So, if you are experiencing larger than expected gaps, you can justify your reasoning in a narrative. While not mandatory, a narrative demonstrates a business’s transparency and gives context to the figures, which in turn gives readers a deeper understanding of those figures.
The gender pay gap information must be published on your UK website, as well as being uploaded to a Government sponsored site. The information must be retained online for 3 years in order to demonstrate progress over time.
Auditing Your Payroll
Employers should consider how they are analysing their pay data. Are the systems up to date? Is there a more efficient way to manage, analyse and collect your payroll data? By looking for obstacles now, you can making it easier when it comes to generating the report. Monitoring changes to payroll data capture is also important, as it will help inform areas for improvement moving forward.
Pay audits can give an indication of current situation within a business to help identify what needs to be done to improve. If issues are identified employers should consider whether there are any justifications, legal or otherwise, as to why there is a gender pay gap in a certain part of their business.
Dates To Remember
1 October 2016: The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 come into force on this date. They will require all private and voluntary sector employers with 250 or more employees to publish prescribed information about their gender pay gap.
1 May 2017: Begin to carry out calculations to determine your gender pay gap results.
30 April 2018: Publish the results of the gender pay gap analysis on your organisation’s website before 30 April 2018. The results must be posted in a publicly accessible manner. A signed statement that the information is accurate must accompany the results and the results must remain on the website for at least three years.
If In Doubt, Refer To Experts
Outsourcing your payroll to an experienced service provider can make gender payroll reporting much easier. Payroll legislation is always changing and compliance is becoming more and more complex. An experienced payroll service provider will have the expert knowledge and software needed to produce accurate and compliant reports.