Gender pay reporting: the top five issues for employers

Are you ready to report on your gender pay gap? Under new regulations which came into effect on 6 April 2017, employers in Great Britain with 250 employees or more must calculate and publish the difference in pay between male and female employees. However, recent surveys show that employers are behind the curve in preparing for their new obligations. 

There are six pieces of information which have to be published. In a nutshell, these involve comparisons of both the hourly rate of pay of male and female employees on a snapshot date of 5 April in each year and of bonuses paid to male and female employees over the year preceding that date. Employers also have to disclose the proportion of male and female employees in each of four pay bands. The first snapshot date is 5 April 2017 with publication of the data by 4 April 2018.

To help you gear up for compliance, the head of Ashurst's European employment practice, Crowley Woodford, discusses the five key questions which you as an employer need to ask yourself.

1. Do you have 250 employees?

The answer may seem obvious but bear in mind that the rules apply to individual employers so, in a group context, a subsidiary only has to report if it has 250 employees or more. There is no compulsory aggregation for groups.

Also note that the definition of "employee" in the regulations is very wide and can include, for example, some self-employed contractors as well as overseas employees with a strong connection to Great Britain. Partners and LLP members can also count as employees for the purposes of calculating the threshold (although they do not have to be included in the data). Job sharers and part-time employees each count as one employee.

2. Can you collect the data you need?

If you don't already collect gender pay data, you need to make sure you have the mechanisms in place to collect that data, for example via payroll systems. Do you need to outsource any data collection? Taxable share-based awards need to be included in bonus comparisons so these should be tracked. 

Consider also whether your HR team has information about which gender, if any, employees self-identify as. Be sure you know exactly which employees need to be included in the data - it is not as straightforward as it may seem. You also need to know each employee's weekly working hours; that needs some thought for employees with variable hours. 

3. Should you include a voluntary narrative with the data?

It is important to consider including a voluntary statement alongside the data to explain any gender pay gap which those figures may reveal, highlighting for example particular factors relevant to your business which may have affected the figures.  Equally important is to identify the reasons for any gender pay gap and how you plan to close it. Progress can be reported on annually.

4. Are you prepared for the consequences of a significant gender pay gap?

Be aware of the potential for adverse publicity and reputational damage if the data shows a significant gender pay gap, particularly by comparison with other employers in the same sector. Have a strategy in place to deal with this. Consider also the impact on recruitment and staff morale. Publication of the data could even spark equal pay claims from staff, although given that the figures do not have to be shown by grade or job title, that risk may be small.

5. Do you need to take action to avoid bonus double counting?

A bonus paid in the pay period (such as a week or month) in which 5 April falls must be counted in calculating the hourly rate of pay at 5 April as well as being included in the separate bonus comparisons. For hourly rate of pay purposes, the bonus can be pro-rated so that only the amount of the bonus referable to that pay period is included. Nevertheless, there will still be an element of bonus double counting which could highlight a gender bonus gap. You may wish to avoid making bonus payments around the time of the snapshot date.

How Ashurst can help

We are currently helping our clients prepare for their gender reporting obligations. The first snapshot date is 5 April 2017 with 4 April 2018 being the longstop date for publishing the data. Nevertheless, employers need to be thinking ahead. The sorts of issues we can assist you with are:

• assessing which employees count towards the 250 employee threshold and should be included in the data; 

• reviewing a mock run of the disclosures to ensure they are compliant; 

• helping to prepare an effective narrative to accompany the figures; and
• advising on the data protection implications of outsourcing the collection of data.

Any advice we provide will benefit from legal privilege which will be important during the evaluation of your data.