What will the new gender pay gap reporting regulations mean for employers?

New rules on pay transparency for companies with over 250 employees will come into effect in October 2016 and employers who are unsure of their obligations should take early advice.

In 2015, the gender pay gap between women and men was 9.4% for full time employees. If part time employees were included, it rose to 19.2%, as many more women work part time than men.

Until recently, the government has preferred a voluntary approach for employers publishing information about their gender pay gap figures. This is set to change and a consultation is planned to result in regulations requiring pay gap reporting from the year beginning April 2017. These regulations will be made under existing powers in S.78 of the Equality Act 2010.

The draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 [the Regulations] will require private and voluntary sector employers with over 250 employees to publish metrics including mean and median calculations, bonuses and earnings distribution across different levels of income and seniority. The regulations remain in draft form, but the relevant date is unlikely to change. 

Pay will include most types of remuneration which go through the payroll, but excludes overtime pay, expenses, benefits in kind and the value of salary sacrifice schemes.  Employers will be able to add an explanation of any pay gaps and of what action is being taken to address them.

Reporting must be carried out in respect of \'relevant employees\' which is likely to include casual workers and zero hours workers (but not agency staff).  Employees on certain types of leave must also be counted on the basis of actual pay received during the reference period. 

Analysis of the gender pay gap must take place each April, starting in 2017 and a report published within 12 months on the employer\'s website and be available for the following three years.  It must also be uploaded to a government website.

However, a significant weakness of the Regulations is the absence of any enforcement process or sanctions beyond the possible publicising of the names of employers who have failed to comply.

Employers who have over 250 employees, or who employ significant numbers of casual staff and as a result may find they are over the threshold, should:

• Review likely relevant staff numbers projected to April 2017 to clarify whether they will be required to report.
• Carefully review status of those who may be considered relevant employees under the Regulations to ensure everyone who should be counted, is.
• Ensure pay data is available for all relevant staff, including casual staff.
• Review bonus schemes to identify if they should be reported.
• If appropriate identify any gender pay gap as at April 2016 to identify problems and start to address them before mandatory reporting comes into force.

The provisions of the Regulations are complex. It is hoped that remaining uncertainties will be removed once they are finalised but any affected employers who are unsure of their obligations should take prompt advice.