UK Labor Update: Gender Pay Gap Reporting

There wasn’t much fanfare in the press following the introduction of new legislation requiring employers with over 250 employees to report on their Gender Pay Gap earlier this year.  However, thanks to the BBC’s recent publication of the salaries of its highest earning presenters, the majority of whom are male, Gender Pay Gap reporting has been firmly thrust into the spotlight. 

The requirement

Employers with over 250 employees are required to calculate their gender pay gap and publish the details on their website by 4 April 2018.

This will involve calculating the median and mean gender pay gap based on an hourly rate of pay. They must also calculate the pay distribution divided over 4 quartiles and the number (as a percentage) of males and females in each quartile.

Employers must also publish the difference between their mean and median bonus payments to men and women and the proportion of males and females who receive a bonus.

Why is this important?

The information must be published on the employer’s website and the Government will also publish league tables of organisations’ gender pay gaps. This information will be seen by a company’s clients, competitors, employees and prospective candidates. A recent survey by the Young Women’s Trust revealed that 84% of women would consider an employer’s gender pay gap when applying for a job.

If the calculation reveals a significant gender pay gap, this can affect an organisation’s ability to recruit in an increasingly challenging talent market. It can also generate negative publicity, affect customer and employee relations, and expose the Company to potential discrimination and equal pay claims.

Does it apply to overseas employees of a business based in Great Britain?

If an employer, based in Great Britain, has an employee based overseas, that employee would probably be in scope of the Regulations if they could bring a claim to an Employment Tribunal under the Equality Act 2010. However this might also depend on if the employment relationship has a stronger connection to British employment law than to the law of any other country.

Does it apply to overseas companies with employees based in Great Britain?

If an oversees company employs 250 people or more within Great Britain, then the Gender Pay Gap Reporting Regulations may apply.

Are there any lessons to be learned from the BBC’s experience?

There is an option under the legislation to provide a narrative to contextualise the data. Can the figures be justified on non gender based grounds? If so, employers should ensure they provide an explanation in order to “manage the message”.

What should employers be doing now?

Carrying out the calculations is an onerous task and will on average take a company 68 hours, according to the Government’s consultation paper. The method of carrying out and deciding what to include in the calculations is also complex and even the ACAS guidance on the calculation runs to 40 pages!

If employers have not already done so, they should start the process now to ensure they are ready for the deadline.

Employers with less than 250 employees who are not caught by the Regulations, may still wish to undertake the exercise and analyse their gender pay gap, given the increasing focus placed on this area by employees and prospective employees. If no gender pay gap is revealed, think of the positive marketing that could follow!

By Boyes Turner, UK, a Transatlantic Law International affiliated firm. 

For further information or for any assistance regarding UK employment law, please contact  Barry Stanton at uklabor@transatlanticlaw.com. 

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 95 affiliated independent law firms worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.