8th March 2016
International Women’s Day has today again highlighted the Gender Pay Gap, but potential legislation changes could create a real headache for payroll teams.
Closing the Gender Pay Gap is an issue that has been lobbied for years, and for good reason. Analysis of the 2015 National Management Salary Survey of 72,000 UK managers revealed that female managers who work full-time are paid 22% less than men. This effectively means that women work 57 days a year for free.
Currently the pay gap now stands at £8,524, rising to almost £15,000 at senior levels. In addition, older women can expect the pay gap to be 38% compared to their male colleagues. As a result of the pay gap, other women suffer reduced work benefits. The average bonus for male managers is almost twice that of their female colleagues.
New legislation may come into force in late 2016 that will require organisations of 250 or more employees to report what they pay their men and women. This could affect over 7,850 businesses, accounting for 40% of the UK workforce. This will result in a huge reporting obligation for payroll teams. Currently the draft regulations require the following:
- A relevant employee is one who works in Great Britain and whose contract is governed by UK legislation (regulation 1)
- The information required of employers must be published within 12 months beginning with the relevant date (regulation 3), and annually thereafter
- Employers will have to provide a signed, written statement confirming that the information is accurate (regulation 8)
- Employers will have to publish the information in English on their searchable UK website in a way that is accessible to employees and the public. Employers will be required to retain this information online for three years (regulation 9)
- In addition, employers will have to upload the information to a website designated by the Secretary of State (regulation 9). It is anticipated that, at the time of commencement, ownership of the website will rest with the Government Equalities Office
- The government will review the workings of these regulations within five years of their commencement (regulation 10)
Employers will have to publish:
- The difference in mean pay during the pay period between male and female employees (regulation 4)
- The difference in median pay during the pay period between male and female employees (regulation 5)
- The difference in mean bonus payments between male and female employees (regulation 6)
- The proportion of male and female employees who received bonus pay during the period of twelve months preceding the relevant date(regulation 6), expressed as a percentage of the total number of all relevant male employees and female employees respectively
- The numbers of male and female relevant employees according to quartile pay bands, A,B,C and D (regulation 7)
Employers will also have to:
- Provide a signed, written statement confirming that the information is accurate (regulation 8)
- Publish the information in English on their searchable UK website in a way that is accessible to employees and the public. Employers will be required to retain this information online for three years (regulation 9)
- Upload the information to a website designated by the Secretary of State (regulation 9). It is anticipated that, at the time of commencement, ownership of the website will rest with the Government Equalities Office
- The government will review the workings of these regulations within five years of their commencement (regulation 10)
These reporting obligations will make transparency within gender pay the norm, and will help ensure that employees are paid for the work they do and are not discriminated against.
The pay gap reporting obligation will be in full effect by 2018. This will add an additional administrative burden to payroll teams. An outsourced payroll provider could help to gather the data and produce the necessary reporting for your business.
