We recently ran a webinar on the new gender pay gap reporting obligations coming into force in the UK in April. During and since the webinar we have been asked a number of questions about how the new reporting obligations will work. Here are some of these questions and our outline answers.
Will group reporting be allowed?
It seems that reporting across a whole corporate group will not be adequate compliance. The Government believes that reporting at a group level would mean the published information would have significantly less meaning for both employers and employees. The Regulations will therefore apply to each separate legal entity with at least 250 employees within a group structure. This could mean that some groups do not trigger the reporting obligations at all (if none of the individual businesses do not employ sufficient employees) whereas other groups may have to publish a number of reports.
In the non-statutory guidance which the Government will be publishing to assist employers, however, corporates will apparently be encouraged (but not required) to disclose gender pay gaps across the wider group on a voluntary basis if their senior leaders, board members and shareholders consider that informative and appropriate. Broader group statistics could in principle also feature in any accompanying narrative, though you would have to think carefully first. After all, if the group as a whole has better average pay ratios than one employer within it, what has gone wrong there? Or, if the rest of the group has a bigger pay gap, why say so? And, depending on management structures, does what is happening elsewhere in the group mitigate one employer’s pay gap anyway?
If you have employees who work very different hours, can you apply an average against all employees?
The calculations in the Regulations are strictly intended to be carried out on an employee-by-employee basis, rather than using an average figure for all employees. There are very detailed provisions in the Regulations to enable employers to calculate the working hours and the effective hourly rate of pay for those workers whose hours of work vary from week to week. Remember that overtime pay is not included.
How will the new reporting requirements work in relation to zero-hours workers? And how does the quartile reporting accommodate seasonal employment?
Employers should take into account zero-hours workers when compiling their gender pay statistics unless they do not have, and it is not reasonably practicable for them to obtain, the worked hours data for them, in which case they can legitimately exclude them when compiling their statistics.
For quartile reporting purposes, employers will be required to report on the proportions of male and female full-pay relevant employees in each of their four quartile pay bands on a particular date, namely the snapshot date of 5 April only. Seasonal roles and variations in gender balances will not therefore be picked up.
If women’s pay is higher than men’s pay do we show a positive pay gap or do we have to carry out the calculations the other way round?
The calculations should be carried out in accordance with the provisions in the Regulations. If women’s pay is higher than men’s pay this will give you a “negative pay gap”. According to the national statistics, for example, the full-time pay gap for employees aged 22-29 is currently negative, i.e. on the measures in the GPG Regulations, women in this age group earn more than their male peers.
Given we have to calculate the mean and median, which is considered our overall pay gap? For example, if for all full-time relevant employees the median is 0.12%, but the mean is -0.26%, what is my overall pay gap?
It depends what you mean by the term “overall pay gap”. This is quite often used to refer to the difference between men and women’s average (median) earnings, taking into account all employees (both full-time and part-time). The Regulations do not use this term and employers are required to publish their mean and median figures separately. You should not combine them to get an “overall” figure.
If those are indeed your statistics, you clearly have nothing to worry about in the first place so far as the reporting is concerned! But remember that a negligible pay gap on either or both scores does not mean that there is necessarily no challengeable discrepancy between individuals.
Once the data is first reported, is there a defined frequency for updates?
Affected employers will have to publish the required information for 2017 by 4 April 2018, and then annually thereafter. The information will have to be published on the employer’s website and remain accessible online for at least 3 years in order to show any progress made.