Government confirms details of mandatory gender pay reporting

The Government has published draft regulations requiring companies with 250 or more employees to publicly disclose details of their gender pay gap.

Following a consultation which concluded in September 2015, the Government has now published the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the “Regulations”) setting out details of new measures which will come into force in October 2016 and require compulsory gender pay reporting by qualifying employers.

What does this mean for employers?

Who?  Employers in England, Wales and Scotland with at least 250 employees will be required to publish gender pay information. For the purpose of the Regulations, a person is an ‘employee’ if they are employed under a contract of employment, a contract of apprenticeship or a contract personally to do work.

What? Overall gender pay gap figures using both a median and mean calculation. In addition, employers will be required to report on the number of men and women working within salary quartiles.

Base pay and bonus will be required to be reported separately.

In addition, employers will be able to provide additional contextual narrative, explaining any pay gaps and setting out what remedial action they intend to take in line with the guidance produced alongside the Regulations.

Where? The gender pay gap information will need to be published on the employer’s website (and signed off by a senior person in the organisation) and it will also be placed on a government sponsored website.

How often? Employers will be required to publish gender pay gap information on an annual basis.

When? Employers will be required to take a first data snapshot in April 2017 which should be analysed and published on a date of their choosing but by no later than April 2018.

Penalties? There will be no civil penalties for non-compliance although the government is keeping this under review. However, the associated negative publicity and employment relations risks of non-compliance will likely be far more damaging.

What are the risks?

The introduction of mandatory gender pay gap reporting is a positive step for diversity, will likely lead to increased transparency and is a welcome development for gender equality. However, publishing adverse gender pay gap information could also have a number of significant and harmful implications for companies including:

  • Reputational damage and negative publicity.
  • Impact on employee attraction, engagement and retention.
  • Risk of significant financial damage resulting from employee claims for equal pay potentially going back over six years.
  • Adverse impact on procurement process.

How can we help?

PwC Legal working in conjunction with PwC data analysts and reward specialists can assist companies by providing legally privileged support, which will:

  • Calculate the gender pay gaps and salary quartile information necessary for compliance with the Regulations. We can also provide assurance over any analysis that companies undertake themselves.
  • Break down gender pay gaps across an organisation and provide results by function, business unit and regions to enable a company to understand areas driving pay gaps and allow employers to retain control over highly sensitive data.
  • Analyse any pay gaps, test these against potential objective justifications and identify any high risk areas.
  • Prepare a comprehensive, legal report providing insight and analysis on the data, including potential justifications and identifying any high risk areas.
  • Work with employers to prepare a bespoke action plan to address and remedy any issues and minimise risks.  This could include consideration of overall reward strategy and the utilisation of our bespoke technology.

In addition to helping clients with ongoing mandatory reporting obligations, PwC Legal’s reporting, discussions and action planning can take place in a confidential and legally privileged manner. This will enable companies to fully understand any gender pay gaps within the context of equal pay legislation, so that gaps can be presented in a meaningful way to minimise potential commercial and legal risks.  This will also assist with the development of an action plan to minimise such gaps.

Why PwC Legal?

We are the market leaders in equal pay reviews and are uniquely placed with complementary teams of specialists in employment law, reward and data modelling.

We have significant experience in carrying out equal pay reviews and have worked with clients across a wide variety of industries in this area.

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