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Wake-up call: Ensure your gender pay gap report reflects the reality

26 May 2016
Wake-up call: Ensure your gender pay gap report reflects the reality

Operators employing more than 250 staff should plan now before they have to publish their gender pay gap breakdown, says Stuart McBride

The problem

The law

New regulations are expected to come into force on 1 October 2016. They will require large employers with 250 or more employees to publish their mean and median gender pay gap, their mean gender bonus pay gap, the proportion of men and women that receive a bonus, and the number of men and women in each quartile of their pay distribution. Public sector employers are expected to be excluded.

A snapshot of pay data will be taken on 30 April 2017 to make the calculations, and the information will have to be published on the employer's website and uploaded to a government-sponsored website by 30 April 2018. This process will then be repeated annually.

While there are no penalties for failing to comply, the government will be running compliance checks and publishing sector tables so that figures can be compared.

Expert advice

The regulations are not yet in final form, with the final version expected this summer. Currently, 'employee' is narrowly defined, capturing those employed under a contract of employment only. However, the expectation is that a wider definition will apply to include those "employed under a contract of employment, a contract of apprenticeship or a contract personally to do work". This would significantly extend the scope of the regulations and could push some operators over the threshold of 250 or more employees.

Another point to consider is what counts as 'pay'. The draft definition includes maternity pay, which means that when a female employee is on maternity leave, it is her maternity pay figure that has to be used. The concern is that this could result in a misrepresentative increase in the gender pay gap, because the woman's higher contractual salary cannot be used for calculation purposes.

In a similar way, the exclusion of salary sacrifice from the definition of 'pay' may be detrimental. Again, a misrepresentative increase in the gender pay gap is likely to result if it is mainly female employees that claim childcare vouchers by way of salary sacrifice and their lower salary has to be used when calculating the gender pay gap.

In preparation for the new laws, operators should check their systems to ensure that the required information can be generated. It will be worth giving some thought to what additional information may be beneficial to publish to help explain why the figures have come out the way they have.

Employers should consider running the required figures for a snapshot period in 2016 to highlight any discrepancies sooner rather than later. This will serve as a useful comparison figure that employers may consider publishing to show the improvements made.

Hospitality operators may also want to show full-timers and part-timers separately. When broken down in this way, the figures can be revealing. For example, the Office for National Statistics figures for 2015 stated that the median gender pay gap for part-time employees was negative (-6.5%) while the figure for full-time employees narrowed to 9.4%. This tells a different story from the overall gender pay gap figure of 19.2%.

Checklist

  • Consider whether you are affected by the new rules
  • Check your systems and internal infrastructure to make sure the figures can be calculated and published on time
  • Take steps now to investigate and improve any pay gap
  • Consider any additional information that you may wish to publish

Beware

Despite the lack of civil criminal penalties, the desire to avoid being 'named and shamed' and the resulting damage to reputation and recruitment will be a driving force for many in the hospitality sector to comply.

Contact

Stuart McBride is an employment partner at TLT

stuart.mcbride@TLTsolicitors.com

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