The U.K. Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 went into effect in April. The new law requires private employers with 250 or more U.K.-based employees to publish, for 2017 and every year thereafter, information showing differences in pay between male and female employees.
What Must Be Reported? Employers subject to the Regulations must publish the following information:
- mean gender pay gap based on hourly pay and bonus;
- median gender pay gap based on hourly pay and bonus;
- mean gender bonus gap;
- median gender bonus gap;
- proportion of male and female employees receiving bonus pay; and
- proportion of male and female employees in the company’s lower, lower middle, upper middle and upper quartile hourly rate pay bands (excluding paid leave).
How Are The Data Calculated?
Pay and Bonus. Employers will have to calculate employees’ gross hourly pay, using pay data for the pay period falling within the mandatory “snapshot date” of April 5. Gross hourly pay is based on all “ordinary” and bonus pay for the relevant pay period. Ordinary pay includes basic pay, allowances, pay for piece work, pay for leave, and shift premium pay. Bonus pay includes any remuneration in the form of money, vouchers, securities, securities options, or interests in securities, relating to profit sharing, productivity, performance, incentive or commission.
Quartile Bands. Quartiles are calculated by ranking employees by gross hourly pay from lowest to highest. The list then is divided in four equal sections to the extent possible, and reporting how many men and women are in each quartile.
Detailed instructions on how to calculate each factor can be found on here the HM Government website.
How Is The Information Reported? The required information must be published on the employer’s website in a manner accessible to all employees and to the public. The information must be accompanied by a signed statement of a corporate director or equivalent, confirming the information is accurate. The information must be maintained on the employer’s website for at least three years from the date of publication. The information and signed statement also must be submitted to the Secretary of State for publication on a government website. Employers additionally may (but are not required to) submit a written narrative explaining why a gender pay gap is present and what the organization intends to do to close the gap.
What is the Deadline for Reporting? Employers must publish the required information each year within 12 months of the mandated “snapshot date” of April 5. Thus, 2017 information must be posted and reported by April 4, 2018.
What are the Sanctions for Non-Compliance? The Regulations do not contain any explicit sanctions for failure to comply. However, the Explanatory Memorandum to the Regulations provide that failure to comply will constitute an “unlawful act” and thus would fall within the enforcement authority of the Equality and Human Rights Commission.
What Does This Mean for Employers with U.K.-Based Employees? The information that must be published is a simple comparison of average and median pay between all men and women in a covered employer’s relevant workforce. The published data will not account for legitimate, non-discriminatory, business reasons accounting for any average or median pay differences, such as differences in job type or function, tenure, time in position, experience, performance, location, etc. Unless employers include the permissible (but not mandatory) written narrative, there will be no opportunity to explain or qualify possible gaps which appear in the data.
Employers subject to the Regulations should begin reviewing and gathering payroll data and demographic information necessary to calculate the required information. Moreover, covered employers should consider performing privileged pay analyses prior to submitting any information to identify the reasons for any gender pay gap differences. This will enable an employer to better determine whether to provide the additional voluntary narrative and other public relations communications before releasing the data.
We will continue to monitor this developing story and keep you apprised of any updates. Jackson Lewis’s Pay Equity Resource Group attorneys are available to provide strategic guidance and assist in interpreting and correcting possible pay gaps.