Gender Pay Gap - what you need to know
New legislation today states that organisations with 250 employees or more in the private or voluntary sector, must have disclosed their gender pay gap, and continue to do so on an annual basis.
Organisations within the public sector have already had to comply by March 30, 2018.
Euan Lawrence, employment law expert at Blacks Solicitors LLP, answers some commonly asked questions around the much talked about report.
Q. What is the gender pay gap?
“The gender pay gap is the difference between average male and female pay within individual organisations and across the UK as a whole (not to mention the rest of the world). This is normally expressed as a percentage. So, if the average man earns £10 per hour and the average woman earns £8 per hour, this would generally be referred to as a 20% gender pay gap. In April 2017 the Office for National Statistics reported that the overall national gender pay gap was 18.4%.”
Q. What do organisations need to publish?
“The information they are required to publish is, as at the ‘snapshot date’ (5 April 2017 for the private/voluntary sector; 31 March 2017 for the public sector; and annually for both thereafter):
· The difference between the mean hourly rate of pay for ‘full pay’ male and for ‘full pay’ female employees (where ‘full pay’ excludes any employees who had reduced pay due to, for example, being off on maternity leave) during the pay period (if employees are paid weekly, a week, if monthly, a month etc.) in which the snapshot date falls;
· The difference between the median hourly rate of pay for full pay male and for full pay female employees during the pay period in which the snapshot date falls;
· The difference between the mean bonus paid to male employees and to female employees during the 12 month period ending on the snapshot date;
· The difference between the median bonus pay paid to male employees and to female employees during the 12 month period ending on the snapshot date;
· The proportions of male employees and female employees who were paid bonus(es) during the 12 month period ending on the snapshot date (this is calculated on the basis that if, for example, of the ten female employees two received bonuses, the proportion will be 20%); and
· The proportions of male employees and female employees in each of the four quartiles of an employer’s pay structure based on average hourly pay during the pay period in which the snapshot date falls (i.e. what proportion of the employer’s top 25% earners are female/male, what proportion of the second highest 25% earners are female/male etc.).”
Q. Is anyone excluded?
“Organisations with 249 employees or less are currently exempt but this may change in time. Partners are also specifically excluded from the definition of ‘employees’ for these purposes. However, some firms (especially within professional services such as law and accountancy) are coming under pressure to include these details as well in order to make the gender pay gap information more meaningful.”
Q. Why are employers being asked to publish gender pay gap data?
“The government’s view is that publishing data that reveals a gender pay gap (particularly a very significant one) within employers is likely to lead to these employers taking steps to reduce such gender pay gaps to limit negative publicity about themselves as much as anything else. It may well be correct that employers will not be as attractive to the top female talent within their sector if they have a glaring deficit in pay, which could in turn lead to problems with recruiting and retaining the best and brightest staff. Time will tell whether this serves to persuade employers to take meaningful steps towards reducing the pay gap.”
Q. Can companies be punished if they reveal one?
“Under the legislation related to the gender pay gap it is not illegal to publish data that demonstrates a gender pay gap at your organisation. However, failure to comply with that legislation by not publishing the required data (in part or at all) would be a breach of the law.
“With that said, the government has not yet stipulated what sanction will be faced by employers who fail to comply (it is possible that this may involve fines or merely ‘naming and shaming’). In the first instance, the Equality and Human Rights Commission has confirmed that it will police non-compliance with the gender pay gap reporting requirements and will be sending out letters to all such employers on 9 April 2018 demanding compliance within 28 days, failing which court proceedings will follow.”
Q. How can people find out if they’re being affected?
“The legislation requires that employers who meet the criteria publish the required information both on their own website and on one prescribed by the government (https://gender-pay-gap.service.gov.uk/). The published data will not show employees whether they are (individually) being paid less than they should be but if this reveals a material pay gap then it may lead them to ask questions of their employer in relation to their level of pay.
“Employees can also find out what the national average gender pay gap is for their particular job is at https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/findoutthegenderpaygapforyourjob/2016-12-09. “
Q. If they are – what can they do?
A. “Employees can ask their employers questions about whether they are being paid as much as their opposite sex peers and ACAS has produced guidance as to how such questions should be asked and answered.
“If such questions are not answered or if the answers reveal discriminatory practice then a formal complaint through the internal grievance process would be a logical next step for an employee (which may avoid the need for an employment tribunal claim).
“Alternatively, if a female employee has reason to believe that a particular male employee (who performs work that is: ‘like’ hers; rated as equivalent to hers; or of equal value to hers) there is nothing to stop her from simply asking that male employee what he is paid. The Equality Act includes an absolute protection of the right of employees to discuss their pay with one another (regardless of any ‘pay secrecy’ clause in employment contracts) if the purpose of the discussion is to find out whether there is a disparity in pay linked to their sex. In that circumstance an employer is prohibited from taking action against either employee for being involved in such a discussion.”
Q. Is there any action they can take?
A. “The best advice for any employee who comes to realise that they are being underpaid relative to employees of the opposite gender (bearing in mind that men can also make equal pay claims if they are carrying out equal work) is to initiate the process of ACAS Early Conciliation to protect their position; and seek guidance from an employment law specialist. Leaving a claim for several months may impact on how much you can recover from your employer so it is best to act sooner rather than later.
“If an employee finds out that they are not being paid the same as an opposite sex employee for ‘equal work’ they only have a limited period of time within which to issue an equal pay claim at the Employment Tribunal (usually six months from the date on which the employee’s employment terminated). In addition, whilst a claim can be issued during employment there can be pitfalls in delaying a claim because the arrears of pay that a Tribunal will award if an employee is successful in such a claim will usually only go back six years from the date the claim was issued.
“It is worth remembering that, where Tribunals find a breach of Equal Pay legislation in most circumstances they must order, in addition to the payment of any financial award, that the employer to conduct an equal pay audit to ensure that there are no other breaches of the law hidden within its payment structure. Therefore, one successful claim can lead to very significant changes across an organisation as a whole.”