Gender pay reporting – regulations intended to come into force in October 2016

When in force private and voluntary sector employers in England, Wales and Scotland with 250 or more employees will be required to calculate their gender pay gap from April 2017 and publish overall mean and median pay gaps by April 2018. Employers will thus have a lead-in time of about 18 months after commencement of the regulations to publish the required information for the first time and must then publish annually thereafter.

It will be necessary for employers to divide their pay distribution into four bands and work out the number of men and women in each quartile. Employers will also have to publish the difference between the mean bonus payments paid to men and women over a 12 month period, and the proportion of male and female employees that received a bonus.

Pay includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other pay (including car allowances paid through the payroll, on-call and standby allowances, clothing, first aider or fire warden allowances). It does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits.

Pay is to be calculated before deductions for PAYE, national insurance, pension schemes, student loan repayments and voluntary deductions. To generate average earnings figures unaffected by the number of hours worked, employers will need to calculate an hourly pay rate for each relevant employee.

Employers will be required to publish their gender pay gap information on their website, retaining it online for three years, together with a written statement confirming that the information is accurate. The information will also have to be uploaded onto a government sponsored website.

The draft Regulations are published for consultation until 11 March 2016. The Government’s consultation document and the draft regulations themselves can be found here.

The Government will issue supporting guidance to help employers implement the regulations later this year. It will set out how to account for different governance structures (such as subsidiaries and parent companies) and advice on providing voluntary narrative that explains any pay gaps and what actions the employer is taking.

It is thought that the regulations will affect about 8,000 employers across the U.K.

The Prime Minister has also announced the Government’s intention to extend mandatory gender pay reporting requirements to the public sector.

This content is correct at time of publication