Subject to a final consultation the Government are introducing mandatory gender pay gap reporting.
This is to try and address equal pay issues. These regulations will apply to private and voluntary sector employers in England, Wales and Scotland with at least 250 employees.
The Draft Regulations are summarised below.
Commencement and scope
Subject to the approval of Parliament, the regulations will come into force on the 1 October 2016. Employers with 250 or more employees will fall within scope of the regulations.
“Pay” includes basic pay, paid leave, maternity pay, sick pay, allowances, shift premium pay, bonus pay and other pay (including car allowances paid through the payroll, 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
Calculating gender pay gaps
The regulations require employers to publish their overall mean and median gender pay gaps.
• Reflecting the full earnings distribution, the mean can be useful because women are often over-represented at the low earning extreme and men over- represented at the high earning extreme.
• By identifying the wage of the middle earner, the median is the best representation of the ‘typical’ difference as it is unaffected by a small number of very high earners.
Gender bonus gap
Employers will need to publish the difference between the mean bonus payments paid to men and women.
Employers will also have to publish the proportion of male and female employees that received a bonus.
Employers will have to report on the number of men and women in each quartile of their pay distribution.
Quartiles split an ordered data set into four equal groups, where each group contains a quarter of the data. The objective is to see the numbers of women and men in each quarter by the overall pay distribution.
Where to publish
Employers must publish the information on their UK website that is accessible to employees and the public. In addition, employers must put the information on a government-sponsored website.
Pay equality is a major issue for employers. And with mandatory reporting coming into force, staying on top of it – from handling the equal pay audit to addressing equality issues overall in the workplace – will become a must.
With years of experience and wide-ranging expertise, Ashworth Black can help your company make sure it’s complying with legislation, both now and in the future, leading to a culture of equality.
Speak to us today about equal pay audits and creating an effective pay-reward culture.