Mandatory Gender Pay Gap reporting consultation response

12 December 2016

The government has published their response to the consultation on draft regulations for mandatory gender pay gap reporting.

In February 2016 a consultation was published to gather views on what, if any, modifications should be made to draft regulations requiring large private and voluntary sector employers in England, Wales and Scotland to publish the differences between the average pay and bonuses of their female and male employees.

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 have been laid before parliament for approval before coming into force on 6 April 2017.

In advance of the commencement date, the government will continue to engage with key stakeholders to ensure that all employers within scope understand the regulations and publish the required gender pay gap information during the first reporting cycle.

The government will also continue working with those employers that already publish gender pay gap information to help others learn from their positive experiences. As announced in February, the government will provide a package of support to help employers calculate and address their gender pay gap, including:

  • A campaign of myth-busting UK-wide events and multimedia guidance to help employers calculate their gender pay gap, gender bonus gap and the numbers of men and women at different pay quartiles.
  • Targeted support for smaller employers, and those in sectors that are least advanced on gender equality (e.g. STEM).
  • Share best practice of exemplars through Think, Act, Report, and a report on the trailblazing action many businesses are taking to tackle the pay gap was published in February.

The consultation response outlines the amendments that have been made to the draft regulations as a result of feedback from respondents:

  • In the interests of reducing the burden on employers, the snapshot date has been changed to 5 April (previously 30 April).
  • The non-statutory guidance will encourage employers to publish the gender pay gap information on a voluntary basis in those instances where the number of employees slightly drops below the mandatory threshold on 5 April in a particular year.
  • The non-statutory guidance will encourage corporate groups to disclose gender pay gaps across the wider group on a voluntary basis if their senior leaders, board members and shareholders consider that informative and appropriate.
  • A number of responses sought clarification about specific elements of remuneration that are included and excluded from the definition of pay used within the draft regulations, and each of these points is addressed in the response (pages 10-20). Non-statutory guidance will clearly outline which elements of remuneration should and should not be captured in pay gap or bonus gap calculations.
  • Guidance will be provided to help employers to identify which employees are within scope. The regulations have been amended so that it is clearer that they are intended to apply to employees within the meaning of section 83 of the Equality Act 2010:
    • Any employees within the meaning of the Act who are remunerated during the reference period would be included, such as zero-hours contractors, apprentices and some consultants.
    • Those who are not based in Great Britain but are still regarded as being employees of employers within scope could still be covered because of a strong connection with Great Britain.
    • Self-employed people (i.e. those who are not employees for the purposes of the Equality Act 2010) should not be included in the overall gender pay gap calculations.
    • Agency workers will be taken into account by the employer with whom they have the contract of employment, and this will generally be their agency.
  • Employers will not be required to publish a separate part-time pay gap at this time.
  • Reporting by age will not be required. The non-statutory guidance will suggest that some employers may find it useful to provide this information as part of their voluntary narrative.
  • Regulations have been amended so that bonus payments made in securities, interests in securities and securities options are captured by reference to income tax liability. Clear guidance on how to comply with the gender bonus gap reporting requirements will be provided.
  • Regulations have been amended to require large employers to publish both mean and median gender bonus gaps.
  • Regulations have been amended to clarify that employers should generate quartiles by dividing the workforce into four groups, each with an equal number of employees ranked according to average hourly pay, starting from lowest paid to the highest paid (full details page 30-31 of the response).

To help employers understand the factors driving any gender pay gaps and take action to address them, the Equality and Human Rights Commission (EHRC) recommended that supporting guidance should also encourage employers to consider the following aspects of pay and progression:

  • Starting pay for men and women.
  • Promotion rates for men and women.
  • The proportion of mothers returning to the employer after maternity leave, and the proportion of mothers still in employment a year after returning.
  • The proportion of men and women using various flexible working patterns, and levels within the organisation at which take-up is occurring.

The government is working closely with ACAS to develop clear and user-friendly guidance to help employers understand and implement the regulations. The guidance will include advice about the voluntary contextual narrative that will reflect relevant and appropriate proposals raised by stakeholders during the second consultation, such as those outlined above.