Gender pay gap reporting
In April 2017 legislation was brought into force requiring employers with 250 or more employees to publish data about the pay difference between male and female employee rates of pay. The government’s stated intention is to use the reporting requirement to help tackle the gender pay gap – the difference between average male and female pay. This guide addresses the reporting requirements for the private and voluntary sector. There is separate legislation for public sector employers.
For further information, members can:
- listen to the REC's gender pay gap reporting webinar with the Government Equalities Office
- View and download our new Gender Pay Gap Reporting guide that helps members understand what needs to be reported and how to make the correct calculations
What is gender pay gap reporting?
The gender pay gap is the difference between average male and female pay, expressed as a percentage of male pay. The government’s stated intention is to use gender pay gap reporting as a means of tackling pay inequality between men and women.
Regulations made under the Equality Act 2010, require large employers (with 250 employees or more) to calculate the difference in average male and female pay (using mean and median) and publish that data. Employers will be required to report on differences using a calculation of hourly rates and also bonus pay differences. The regulations detail the method of calculation and also, how, when and where the information must be published. This is set out in the questions below. The regulations, requiring reporting for private sector employers came into force on 6 April 2017. Separate regulations for public sector employers came into force on 31 March 2017.
Gender Pay Gap Reporting guide
The REC have created a new Gender Pay Gap Reporting guide for members, explaining what needs to be reported on and how to make the correct calculations.
Applicability
The reporting provisions apply to employers with 250 or more employees on the snapshot date. Recruiters will need to take into account their temporary workers when calculating the head count See ‘who is an ‘employee’ for gender pay gap reporting purposes?’ and ‘what is the snapshot date?’ below.
What is the snapshot date?
The snapshot date is 5 April each year starting with April 2017. On this date employers must assess how many employees they have. If the answer is 250 or more then that employer will be required to report by the end of the reporting period (4 April the following year). If not, that the employer will not be required to do anything until the following snapshot date (5 April 2018) when they will need to assess again how many employees they have.
What information must be published?
With regards to employees who were employed by the employer on the ‘snapshot date’:
- The difference in the average (mean) hourly rate of pay between male and female relevant full pay employees;
- The difference in the average (median) hourly rate of pay between male and female relevant full pay employees;
- The difference between the average (mean) bonuses paid to male and female employees;
- The difference between the average (median) bonuses paid to male and female employees;
- The proportion of male and female employees who receive bonuses;
- The relative proportions of male and female employees in each quartile pay band of the workforce.
(See ‘what is the snapshot date?’ and ‘who is a full pay employee?’ below).
Where, how and when must the information be published?
Where?
Employers will be required to publish the data on both their own websites and a dedicated government website. The report can also include additional commentary which explains differences in pay. This is voluntary but employers may find this useful to, for example, provide context for any factors which may have resulted in differences in pay. Recruiters may find this helpful where for example data is skewed by differences in pay averages of their internal workforce versus their temporary workforce who are supplied to clients and who pay rates are not entirely within the recruiter’s control.
How?
Employers are required to publish the data and the supporting statement ‘in a manner that is accessible to all its employees and to the public’. The information can published on the employer’s website. Additionally the information must be published on the designated government website together with the name of the person who signed the supporting statement.
When?
The information must be published within 12 months of the snapshot date. So for example, the first reports for the period from the first ever snapshot date of 5 April 2017 must be published by 4 April 2018 and annually thereafter. Once published, the information must remain for minimum of three years from the date of publication. The information must be published within 12 months of the snapshot date. So the first reporting date for the first snapshot date of 5 April 2017 must be published by 4 April 2018.
Has the gender pay reporting been suspended in 2021?
Because of the pandemic, the gender gap reporting was suspended in March 2020, and was due to start in April, but this has now been extended by six months to allow employers to submit their pay gap information. Employers now have until 5 October 2021 to report their gender pay gap information.
This applies to all employers who had 250 or more employees from your 2020 snapshot date. For the purpose of gender pay gap reporting, it includes individuals who are engaged on contracts for services, such as temporary workers, as well as internal employees.
Please see the Government guidance for more information on gender pay gap reporting.
Who is an 'employee' for gender pay gap reporting purposes?
The word ‘employee’ has a much wider definition than usual for the purpose of gender pay gap reporting. It means:
- Individuals who are engaged on a contract of employment; and
- Individuals who are engaged on contract under which they provide their services personally
Recruiters who supply temporary workers should note that the latter category is likely to include most temporary workers engaged on contracts for services who meet the ‘worker’ definition for other purposes (e.g. for National Minimum or Living Wage, statutory holiday entitlement under the Working Time Regulations 1998).
Partners in a firm are excluded.
What are the mean and median?
Mean and median are types of averages. The mean is the type of average most people are familiar with where the total amount is divided by quantity. E.g. if 5 baskets contain varying number of apples, to find the mean average of apples in each basket you would add together the total number of apples and divide by 5.
The median is the mid-point of a range of values. So if the baskets contained say, 8, 6, 12, 9, and 3 apples, you would first of all sort number of apples into numerical order (3, 6, 8, 9, 12) and find the mid-point in the range - i.e. 8.
Difference between mean and median bonus pay
The difference between the mean/median bonus pay must be calculated as a percentage of the mean/median bonus pay paid to men.
Who is a 'full pay employee'?
For the purpose of calculating the difference in the average (mean and median) hourly rate between male and female employees, only employees who are ‘full pay’ employees are taken into account. This means employees who (whether full time or part-time) have not had reduced pay during the pay reference period that covers the snapshot day.
Any employees who are on leave (e.g. annual leave, maternity, paternity, adoption, parental or shared parental leave, sick leave or other special leave), on the snapshot but who still receive their full normal pay count as a full pay employee. But if during that leave their pay is reduced then they are not a full pay employees. This means that while they are still included in the employers head count when assessing whether there are 250 or more employees, their data is not included when calculating the mean and median average pay.
So for example if an employee is on sick leave on the snapshot date but only received statutory sick pay (which is below their normal pay) that employee is not a full pay employee. If however the employee receives occupational sick pay which is paid at the same rate of normal pay, then that employee will be a full pay employee.
How should employers deal with part-time employees?
All employees are taken into account for the purpose of determining the headcount on the snapshot date. Part time and full time employees each count as one employee, irrespective of the number of hours worked.
While all employees who are employed on the snapshot date are taken onto account for the employer’s headcount. It may be the case that pay data relating to some of those employees will not be taken into account if they are absent or not working the hours that reflect their normal work pattern over the snapshot period. See ‘who is a full pay employee?’ below.
What is included in 'ordinary pay'?
Included in ordinary pay
Ordinary pay includes basic pay, allowances (such as car allowances) shift premiums, pay for piece work, pay for leave (e.g. holiday pay, maternity/paternity/adoption/shared parental pay) and payments for other periods of leave such as study leave, location allowances (e.g. London weighting).
Excluded from ordinary pay
Pay for overtime, redundancy or other termination payments, pay in lieu of leave (so for example holiday pay paid at a time other than when an employee takes leave – such as on termination of employment or ‘rolled up’ holiday pay. Remuneration in forms other than money, such as benefits in kind (private medical insurance, company cars) are not included. Expenses are excluded.
Deductions
Ordinary pay is worked out on the sum paid before any deductions – e.g. for PAYE income tax, NI, pension contributions etc.
How is the hourly rate calculated?
The regulations set out six steps which must be used to calculate the hourly rate. Note that it is the difference in both the mean and median hourly rate which must be included in the employer’s report.
The steps are explained in the ACAS guide ‘Managing gender pay reporting’.
What is the relevant pay period?
The pay period for reporting purposes is the frequency with which employees are paid e.g. weekly, fortnightly, monthly or any other pay period.
The relevant pay period is the pay period that the snapshot date falls within.
What is included in bonus pay?
Bonus pay includes any remuneration that takes the form of:
- Money, vouchers, securities, security options or interests in securities; and includes
- payments that relate to profit sharing, productivity, performance, incentive or commission.
Bonus pay does not include:
Ordinary pay (see ‘what is included in ordinary pay?’ above), overtime payments and payments made that relate to the termination of employment and redundancy are all excluded when calculating bonus payments.
What bonuses are included in terms of timescales?
The bonuses that are to be included in the publish data are only those that are actually paid during the relevant period (see below). The relevant period is the 12 month period that ends with the snapshot date for that reporting year. So for example, for the first reporting year where the snapshot date was 5 April 2017, and the reporting deadline is 4 April 2018, employers would need to include data for any bonuses actually paid to employees between 6 April 2016 and 5 April 2017. So if for example a commission payment was generated by an employee placing a candidate in a role on 3 March 2016 but the commission payment was not actually paid until 26 May 2016, that payment would need to be included when calculating the bonus pay data to be included in the report due to be published by April.
How do I deal with gender pay gap reporting if I use umbrella companies/payroll providers/other intermediaries?
The ‘employer’ is responsible for pay gap reporting. If you work with umbrella companies, any other intermediaries or pay roll providers, you will need to identify who is the employer of the individuals who are doing the work for your clients. See ‘Who is an ‘employee’ for data pay gap reporting purposes?’ above. If you have the employment contract or personal services contract with the individual then you are the employer and you will need to take that individual into account when carrying out the head count to determine whether you have 250 or more employees. If you are in scope to report then you will also need to include that individual’s pay details when working out the data you must report.
If you use an umbrella company and it is the umbrella company rather than you who has the contract with the individuals who are doing the work, then you are not the employer. If you use a payroll provider to carry out your payroll administration and even to pay the individuals who are undertaking the work but you have a contract of employment or personal service contract with the individuals, you remain the employer of the individuals.
How do I deal with gender pay gap reporting if I supply limited company contractors working through their own (personal services) companies?
As in the question above ‘Gender pay gap - how do I deal with gender pay gap reporting if I use umbrella companies/payroll providers/other intermediaries?’ you need to identify whether you are the employer of the individuals who are doing the work for your clients. You are only required to include to take into account individuals with whom you have a contract of employment or personal service contract. If your contract is with a contractor’s company i.e. you are supplying the company to your client and you have no direct contract with the individual who is doing the work, you are not required to include those individuals in your headcount. Nor are you required to include their pay for your report.
For further information, please see the REC's gender pay gap reporting webinar with the Government Equalities Office.
What if I don't know the gender of all of my employees if some employees prefer not to be identified by a particular gender?
The ACAS guide ‘Managing gender pay reporting’ states that:
"It is important for employers to be sensitive to how an employee chooses to self-identify in terms of their gender. The regulations do not define the terms ‘male’ and ‘female’ and the requirement to report gender pay should not result in employees being singled out and questioned about their gender.
As a starting point, most employers should be able to base reports on the gender identification the employee has provided for HR/payroll, if such records are regularly updated.
Where this information is not available or may be unreliable, employers should establish a method which enables all employees to confirm or update their gender. This can be handled early and proactively when informing employees that gender pay reporting is taking place. It can be done by inviting employees to check their recorded gender, and update it if required. A free acas template communication is available at www.acas.org.uk/genderpay.
In cases where the employee does not self-identify as either gender, an employer may omit the individual from the calculations."
What is the 'supporting statement'?
The data which is captured must be published together with a supporting statement which must contain all of the following information as a minimum:
- Confirmation that the information is accurate;
- The signature of:
(a) director or equivalent if the employer is a company; or
(b) A designated member if the employer is a limited liability partnership: or
(c) A partner if the employer is a partnership
In addition to the compulsory information above, employers are also able to include additional supporting narrative which can be used to explain the reasoning being any gender pay gap that the published data shows. Recruiters may wish to use this to explain any gender pay gap differences which are influenced by pay rates for temporary workers.
How will the reporting requirements be enforced?
The Equality and Human Rights Commission has powers to take action against employers who do not comply with the requirement to report.
Additionally the Government has indicated that it would consider publicly naming employers who do not comply using a form of ‘name and shame’ list.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.