Gender Pay Gap Reporting – What is all the fuss about?

Gender Pay Gaps between men and women are currently very newsworthy as Employers are forced to disclose their gender pay gaps in time for the 4 April 2018 deadline.

The Gender Pay gap is the actual pay discrepancy between men and women irrespective of their job or position and is not based on equal hourly rates.  The main problem for many organisations is the lack of female employees in higher paid roles which is fuelling  gender pay gaps.

It has historically  been unlawful to pay men and women differently for the same or broadly similar jobs since the implementation of the Equal Pay Act 1970, however notwithstanding this the average earnings of male employees still exceeds that of female employees by 18.1%.  The Government felt that it was time that action was taken to try and reduce the gender pay gap in society and this has resulted in new legislation which places an obligation on affected employers to publish gender pay disparities.

There are no penalties for employers who have large gender pay gaps, however it could result in adverse publicity and reputational damage and promote the potential for equal pay claims.   It could also affect recruitment initiatives and staff morale and could be a negative factor for those employers who tender for Government contracts.

We have already witnessed adverse publicity and controversy at the BBC with male presenters earning a lot more than female presenters.  This has also led to the resignation earlier this week of Carrie Gracie, the BBC’s China correspondent, who said that she could not ‘collude’ in a policy of ‘unlawful pay discrimination’.   She also refused an offer of an additional £45,000 on the basis that it still left a big gap between her and her male counterparts and that all she wanted was to be ‘made equal’.  The BBC’s overall gender pay gap was 10.7% in favour of male employees.

Other well known Employers have also this week disclosed their gender pay gaps and here are a few of the worst offenders with their gender pay gap percentages shown in favour of male employees:-

Easy Jet   51.7%

Virgin Money  32.5%

The Co-operative Bank 30.3%

NPower Limited 19%

Ladbrokes Coral Group Plc 15%

The Home Office 10.1%

The legal profession is proving to be no better as a couple of firms that have recently disclosed their gender pay gaps show a large disparity.   Female employees for example at CMS Cameron McKenna Nabarro Olswang are paid 32.8% less per hour than male employees.   National law firm Shoesmiths has also disclosed a pay gap disparity of 13% in favour of male employees.

In the case of Easy Jet they explained that only 6% of its pilots are women attracting an annual salary of £92,400 and that 69% of lower paid cabin crew are women on an average annual salary of £24,800.    Easyjet said that it will be tackling their gender pay gap by setting a target of having one in five new entrant female pilots by 2020.

However it isn’t all doom and gloom as there are some model Employers who have addressed or are close to eliminating the gender pay gap.  One Employer who has no gender pay gap is the British Museum and the UK Armed Forces has a gender pay gap of only 0.9%

The law on Gender Pay Gap reporting falls under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.  It affects all of the public sector, charities and private sector employers that employee more than 250 employees which can also include the self employed and Partners.

The first snapshot date at which the difference in pay between male and female employees must be calculated was 5 April 2017 and this includes regular pay, bonuses, and allowances but does not include overtime pay.

These figures must be made publicly available for example on a Company website with a signed statement from a Senior Manager or Director no later than 4 April 2018 and must be publicised for a period of at least three years.   The data must also be uploaded on to a Government website where the worst offenders are at risk of  being named and shamed.  Affected employers are then legally obliged to report on their gender pay gaps every year thereafter.

There are six pieces of information that must be published.

  1. The difference between the mean hourly rate of pay of male and female full-pay relevant employees.
  2. The difference between the median hourly rate of pay of male and female full-pay relevant employees.
  3. The difference between the mean bonus pay of male and female relevant employees.
  4. The difference between the median bonus of male and female relevant employees.
  5. The proportion of male and female relevant employees who were paid bonus pay during the bonus pay period.
  6. The proportions of male and female full-pay relevant employees in four pay bands as set out in the legislation.

The Equality and Human Rights Commission can also take enforcement action in the event that any stubborn employers fail to comply with their legal obligations in reporting their gender pay gap information.  In the worst case scenario this could result in an unlimited fine and even a conviction.

It is however more likely that employers in breach of the Regulations will be invited by the Commission to enter into a formal agreement rather than face an investigation.

It is therefore recommended that affected employers are proactive in collecting data in good time in order to ensure that they disclose their gender pay gap information before the 4 April deadline each year.  It is also important that employers do everything that they can to offer female employees equality of opportunity to reduce the gender pay gap that is still plaguing our society.

Please contact Steven Eckett at seckett@meaby.co.uk.

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