The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI (2017/172) (GPG Regulations) came into force on 6 April 2017.
The GPG Regulations require large private and voluntary sector employers – those that have over 250 employees on their payroll on the snapshot date of 5 April each reporting year – to report on their website and make publicly available, a gender pay gap report that includes detailed information about the mean and median levels of wages for men and women in that organisation. The report must usually be made available by the employer in April each year and remain available for 3 years post publication.
In view of the COVID-19 crisis, the Government Equalities Office (GEO) and the Equalities and Human Rights Commission (ECHR), tasked with enforcement of the GPG Regulations, suspended enforcement of the gender pay gap reporting deadlines for the 2019-20 reporting year. Subsequently, in light of the continuing effects of the COVID-19 pandemic, the EHRC confirmed that gender pay gap enforcement action for the reporting year 2020-21 would be suspended until 5 October 2021. The suspension of enforcement action effectively meant that employers had an additional six months to meet their reporting obligations for 2020-21
Acas has published non-statutory guidance to employers, Acas: Managing gender pay reporting (the Acas guidance), which was expanded to cover the gender pay reporting requirements for public and private sector employers, and was first published on 3 April 2017 and then updated in February 2019.
On 14 December 2020, the GEO launched a collection of new guidance documents to support employers through the process of gender pay gap reporting. The documents cover a range of issues that employers may face when compiling and publishing their reports:
- Guidance: Who needs to report their gender pay gap discusses employer reporting requirements.
- Guidance: The gender pay gap data you must gather provides a task list for gathering data.
- Guidance: Making your gender pay gap calculations guides employers through the process of making calculations.
- Guidance: The gender pay gap information employers must report supports employers in the production of reports and supportive narratives.
- Guidance: How to publish gender pay gap reports offers employers a template for the publication of their report.
The 250 employee threshold
Whether a company or organisation is mandated to report their gender pay gap information each year depends on whether it has on its payroll 250 employees on 4 April that year. An assessment needs to be made about how many, and what type of staff that employer has engaged at that time, and whether the numbers reach the threshold for mandatory reporting. This can be tricky and requires the application of employment status rules.
Employers should be aware that “employee” in this instance is given the wider meaning within section 83 of the Equality Act 2010, and so includes employees, workers and some casual workers.
Each company within a group of companies is treated as an individual company, and so under an obligation to report separately their gender pay gap information.
The ACAS Guidance recognises that some companies and organisations may fall out of the mandatory reporting scheme, yet the ACAS guidance suggests that despite not being legally retried to report, any such company should consider the benefits to the company of continued voluntary gender pay gap reporting.
If you are an employer and would like support and assistance in applying the criteria in the Regulations to determine whether gender pay gap reporting is mandated for your company, please do give us a call.
How is pay identified
Ordinary pay is specified in the Regulations as being:
- Basic pay.
- Allowances (including those for ancillary duties such as fire warden, location allowances such as
London weighting, recruitment and retention allowances, on-call allowances or allowances for the purchase, lease or maintenance of any item such as a car or clothing).
- Pay for piecework.
- Pay for leave (although in practice this only includes cases where the employee receives full pay, otherwise they are excluded altogether from the gender pay gap calculations).
- Shift premium pay.
It should be noted that on-call allowances are not expressly mentioned in the GPG Regulations, but the Regulations state that all allowances are to be included as part of “ordinary pay”.
Certain payments are expressly excluded from the calculation of wages such as:
- Any redundancy or termination payment.
- Overtime pay
- Pay in lieu of leave.
- Pay provided otherwise than in money, such as benefits provided through salary sacrifice and any other benefits in kind.
- Expenses incurred wholly and necessarily in the course of employment.
(Regulation 3(2), GPG Regulations.)
Once ordinary pay has been identified, the Regulations provide that the employer should calculate the hourly rate of pay for each relevant employee. There are detailed provisions within the Regulations for who is a relevant employee and how to calculate the hourly rate of pay.
Gender bonus gap information
As well as calculating the gender pay gap by reference to the hourly rate of pay for each employee, that generates figures for the mean and median pay levels for each gender, employers also need to consider and report on the gender bonus pay gap. Again, the Regulations specify what types of bonus payment will be included in the calculation and which will not.
How is the gender pay gap and gender bonus gap calculated?
The gender pay gap and gender bonus gap is always expressed as a percentage. The gender pay gap is calculated by working out the difference between the average pay of all male employees and the average pay of all female employees, and dividing that number by the average pay of all male employees. This can be expressed as a formula: where A is average male pay, and B is average female pay.
The formula for calculating the gender bonus gap is the same.
Voluntary Accompanying Narrative
Many employers are choosing to accompany their gender pay gap reporting figures with a voluntary narrative that provides further detailed information on, amongst other matters:
- Data on overtime and the gender split in the hours of overtime worked and the rate of pay those overtime hours attract.
- General information on the workforce demographic, for example age and gender matrix.
- What action is being taken by the employer to narrow the gender pay gap. For example, details of the initiatives it is taking to recruit or promote more women.
There is no provision within the Regulation that provides for an individual to enforce gender pay gap reporting rights against an employer. Failure to comply with the Regulations will constitute an “unlawful act” within the meaning of section 20 of the Equality Act 2006, which empowers the Equalities and Human Right Commission (ECHR) to take enforcement action. Under section 20 of the Equality Act 2006, the EHRC can carry out investigations into “unlawful acts” and can issue unlawful act notices.
In April 2018, the EHRC confirmed in response to a Freedom of Information Act request that it had sent 1,456 letters to employers that it believed had failed to comply with the GPG Regulations.
The fair recruitment, pay and promotion of women in the workplace, and the fair and lawful application of flexible working and family friendly work practices has always been critical for an employer to get right. In order to be as effective and efficient as possible, all staff within an organisation must feel valued and equal. The gender pay gap reporting Regulations have begun to allow women to make a more informed choice about the type of employer they wish to work for, and the conversation of fairness in the workplace has been expanded and made more effective by the yearly data on the gender pay gap published by these organisations.
How can our employment team help?
Hanne and Co Solicitors employment team are able to assist private sector or voluntary sector employers to consider and apply the gender pay gap reporting Regulations to their organisation, ensuring compliance with those rules. We can also assist your organisation to prepare a voluntary statement and voluntary gender pay gap report, if due to its size, your organisation is not yet mandated to publish such detailed data.