The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 ("Regulations") require employers with more than 250 employees to publish details of their gender pay gap by 4 April 2018 (and annually thereafter). Under the Regulations employers are required to take a ‘snapshot’ of their gender pay gap at 5 April 2017 and bonus pay details for the 12 months preceding 5 April 2017 i.e. from 6 April 2016 to 5 April 2017.
To help your business prepare the report by 4 April 2018, please see our gender pay gap reporting guide
With over 500 businesses having already reported their gender pay gap, the pay discrepancy is certainly apparent. The BBC has received much press attention following their mean hourly rate pay gap of 10.7% lower pay for female employees, whilst Phase Eight has published the largest gender pay gap with a 64.8% lower mean hourly rate for female employees. Phase Eight has defended the pay gap by stating that the figures are "misleading" and do not reflect the "true story" due to the ratio of women working in the stores and men working in the head office.
Employers do have the opportunity to provide an explanation for any gender pay gap reported, however they should be mindful that this reasoning will be heavily scrutinised and in many cases action to rectify will be expected. Perhaps the more significant question is not "what is the gender pay gap?" but "what is being done now to rectify the gender pay gap?". With the next snapshot date fast approaching, businesses need to ensure they are doing all they can to reduce any gender pay gap identified.
It is important to distinguish the gender pay gap from equal pay. Gender pay compares the pay discrepancy between men and women regardless of their job role. Equal pay requires "equality of terms" for men and women in the same employment when carrying out equal work (ie, like work, work of equal value or work rated as equivalent).
Although the gender pay gap figures reported will not provide enough evidence on their own to support an equal pay claim, they will certainly promote interest in equal pay within a business. We expect an increase in equal pay claims will follow once the gender pay gap reports are digested. Employers may find they receive questions from employees who wish to establish whether they have an equal pay claim and should prepare themselves for such enquiries.
Notwithstanding the publicity surrounding gender pay, the Regulations have been accused of having no teeth as there are no civil enforcement penalties for failing to comply. However, it is worth noting that the Equality and Human Rights Commission is consulting until 2 February 2018 on proposals to use their enforcement powers to take action against non-compliance. The proposals include the power to take informal and formal action against businesses which fail to comply, including unlimited fines. We will keep you updated.
Employers should also be aware of the corporate governance reforms expected in June this year whereby listed companies will be required to publish the ratio of executive pay to broader UK workforce pay. This follows a raft of corporate governance reform being introduced by the Government in an attempt to improve transparency.
With the Regulations and further accountability in the pipeline, the Government are clearly focusing on openness and responsibility for large businesses.