News- Gender pay gap reporting

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The government recently consulted on their intention to introduce a mandatory duty for public sector organisations to report annually on their gender pay gap (GPG). This legislation has now been laid before Parliament and is expected to come into force on 31 March 2017.

Background

Since the Equality Act 2010 (Specific Duties) Regulations 2011 (SDR) came into force on 10 September 2011, there has been a duty for public bodies with 150 or more employees to publish information on the diversity of their workforce. Although the SDRdoes not currently require mandatory GPG reporting, the Government Equalities Office (GEO) and the Equality and Human Rights Commission (EHRC) provided guidance that made it clear that employers should consider including GPG information in the data they already publish. It is evident that not all employers currently do this, so the government is making the GPG reporting mandatory by amending the SDR so that all public sector employers with more than 250 employees will have to measure and publish their gender pay gaps.

What will employers have to do under the new requirements?

Employers with 250 employees and over will need to publish the following information annually for all employees who are employed under a contract of employment, a contract of apprenticeship or a contract personally to do work. This will include those under Agenda for Change terms and conditions, medical staff and very senior managers. All calculations should be made relating to the pay period in which the snapshot day falls.  For the first year, this will be the pay period including 31 March 2017, providing the regulations become law by then. Employers will need to:

• calculate the hourly rate of ordinary pay relating to the pay period in which the snapshot day falls (see Schedule 1, paragraph 6 of the regulations)
• calculate the difference between the mean hourly rate of ordinary pay of male and female employees, and the difference between the median hourly rate of ordinary pay of male and female employees (see Schedule 1, paragraphs 8 and 9)
• calculate the difference between the mean (and median) bonus pay paid to male and female employees (see Schedule 1, paragraphs 10 and 11)
• calculate the proportions of male and female employees who were paid bonus pay (see Schedule 1, paragraph 12)
• calculate the proportions of male and female employees in the lower, lower middle, upper middle and upper quartile pay bands by number of employees rather than rate of pay (see Schedule 1, paragraph 13).

Ordinary pay (see Schedule 1, paragraph 3) includes:

• basic pay
• paid leave, including annual, sick, maternity, paternity, adoption or parental leave (except where an employee is paid less than usual or nothing because of being on leave)
• area and other allowances
• shift premium pay, defined as the difference between basic pay and any higher rate paid for work during different times of the day or night
• pay for piecework.

It does not include:

• remuneration referable to overtime
• remuneration referable to redundancy or termination of employment
• remuneration in lieu of leave
• remuneration provided otherwise than in money.

The relevant pay period means the pay period within which the snapshot date falls, which for monthly-paid staff would be the month in which the date is included.

Bonus pay (see Schedule 1, paragraph 4) relates to performance, productivity, incentive, commission or profit-sharing, but excludes:

• remuneration referable to overtime
• remuneration referable to redundancy
• remuneration referable to termination of employment.

Doctors’ clinical distinction/excellence awards will be regarded as bonus pay, as well as any other payments above the level of ordinary for performance or expertise such as performance related pay for very senior managers and others.  The relevant period means the period of 12 months ending with the snapshot date.

Calculating the quartiles (see Schedule 1, paragraph 13)

• Determine the hourly rate of pay and then rank the relevant employees in rank order from the lowest to the highest.
• Divide those employees into four sections, each comprising an equal number of employees to determine the lower, lower middle, upper middle and upper quartile pay bands.
• Show the proportion of male and female employees in each band as a percentage of the total employees in each band.

What employers will need to publish (see Schedule 1, paragraph 14)

• The information outlined above will need to be published within one year of the date for the 2017 snapshot.
• The information must be published on a website that is accessible to employees and the public free of charge.  The information should remain on the website for a period of at least three years beginning with the date of publication.
• The EHRC will be responsible for monitoring how public bodies are complying with the GPG reporting requirements and can take enforcement action.

Further information

Find the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 on the legislation.gov.uk website.

NHS Employers will further liaise with the government following the publication of the regulations and its response to the consultation.  We are working with the NHS Staff Council Equality and Diversity Group (EDG) to look at how organisations can best capture the data.