Mind the gap

April 18, 2017

As part of our special report, this issue’s legal round-up turns the spotlight on gender pay gap reporting – and what it means for you

 

 

The gender pay gap is the average difference between the aggregate pay of men and woman. The causes are numerous and cannot simply be explained by pay discrimination, which has been unlawful since campaigners won the right to equal pay over 40 years ago. 

 

The Office for National Statistics suggests the pay gap currently stands at 19.2% for full and part-time workers in the UK, meaning that, on average, a woman earns around 80p for every £1 earned by a man. It is believed that one of the causes of this gap is the concentration of women in lower paid occupations and the fact that women are far less likely to progress to senior levels – still making up only 34% of managers, directors and senior officials.

 

With the aim of creating greater levels of pay transparency between male and female employees, The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 comes into force in the UK on 6 April 2017.

 

For the time being, these regulations will only apply to private sector employers who employ at least 250 employees on 5 April each year – this is known as the “snapshot” date.  So if you employ 250 or more employees on the snapshot date you will be obliged to produce a report on payroll data and publish it by 4 April the following year.

 

Who should be included?

You need to include all relevant full-pay employees/workers in the report. This includes employees, workers, apprentices, contractors or consultants with whom you have a direct contract and who provide personal services to you and any partners in limited liability partnerships.

 

Agency workers should not be counted as they will be included in any report submitted by the agency with which they have a contract of employment. As the report should only provide data for relevant full-pay employees, employees who are on long-term sick, maternity leave etc. should not be included.

 

Your report should include:

  • The difference between the mean ordinary hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees (‘the mean gender pay gap’)

  • The difference between the median ordinary hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees (‘the median gender pay gap’)

  • The difference between the mean bonus pay of male relevant employees and that of female relevant employees (‘the mean gender bonus gap’)

  • The difference between the median bonus pay of male relevant employees and that of female relevant employees (‘the median gender bonus gap’)

  • The proportion of male and female relevant employees who were paid bonus pay (‘the proportion of men and women getting a bonus’), and

  • The proportion of male and female relevant employees in the lower, lower middle, upper middle and upper quartile pay band (‘the proportion of men and women in each of four pay quartiles’).

The rationale for reporting on median as well as mean data is to highlight the potential uneven distribution of employees in lower paid work. Dividing the payroll into four quartile pay bands should highlight the distribution of male and female workers in each band.

 

How is pay defined?

Ordinary pay means basic pay – allowances, pay for piecework and pay for leave and shift premium pay. It does not include overtime pay, redundancy pay, pay in lieu of leave or non-monetary remuneration. Bonus pay means pay in the form of money, vouchers, securities, securities options, or interests in securities, and pay that relates to profit sharing, productivity, performance, incentive or commission.

 

How do I calculate pay?

The calculations involved in producing the report can be complex and it depends on whether you pay your employees weekly or monthly.  The report must contain the payroll data for the snapshot date. Therefore, if you pay your employees weekly, the report should include the data from the week containing 5 April. If you pay your employees monthly then the report should be produced with the April data.  If a bonus is paid in your snapshot, this should be pro-rated so that the bonus for that specific week/month is shown and not the full year.

 

The London Mayors Office (MOPAC) and Transport for London (TfL) will be two of the first organisations to report on the Gender Pay Gap. It may assist you to look at the content and structure of these reports:

 

What next?

Any report you produce requires to be signed off by a director and published on your website. Evidence of compliance must be submitted annually to the Government by 4 April.

 

If you identify a gap, legally you don't have to do anything at the moment. There is no legal requirement to create an action plan or address the gap. But it is believed that by publishing the figures, organisations with a pay gap will be named – and will ultimately deal with the issue. 

 

 

Vital Legal Dates

 

1 April 201 –Increase to National Minimum
Wage/National Living Wage

  • Age 25 +: £7.50 per hour

  • Age 21 – 24: £7.05 per hour

  • Age 18 – 20:  £5.60 per hour

  • Age 16 – 17: £4.05 per hour

  • Apprentices: £3.50 per hour

If you pay your Operatives, Adult Trainees and Apprentices in line with SJIB National Working Rules, there is no need to take any action unless your Apprentice is over 25 and in Stage 2. Details of rates are at www.sjib.org.uk. If you employ staff under other terms, your hourly rates should meet the new minimum rate.

 

2 April 2017 – Increase to Statutory Maternity,
Paternity, Adoption and Shared Parental Pay

  • Rise from £139.58 to £140.98 per week, or 90% of weekly pay, whichever is lowest.

 

6 April 2017 – Increase to Statutory Sick Pay

  • Rise from £88.45 to £89.35 per week.

 

6 April 2017 – Changes to National Insurance rates, and Upper and Lower Earnings Limit

  • The Lower Earnings Limit will rise from £112 to £113 per week.

 

 

6 April 2017 – Increase to Income Tax allowance and thresholds

  • There are increases to most of the tax brackets and personal allowances.

 

6 April 2017 – Gender Pay Gap Reporting

  • The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 comes into force. Eligible employers will have to publish their report before 4 April 2018.

 

6 April 2017 – Introduction of Apprenticeship Levy

  • This levy on UK employers with an annual pay bill over £3 million will fund new apprenticeships. The levy will be charged at 0.5% of the pay bill, with a £15,000 allowance to offset the levy.

 Helping women climb the ladder, read more here

 

 

Julie Thompson, Employment Affairs Policy Development Adviser

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