On April 6, 2017 the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 became law in Great Britain requiring businesses to publish information annually stating the differences in the average pay and bonuses of their male and female employees.
Employers are required to take a snapshot of gender pay data as at April 5 every year, with the first ‘snapshot date’ being April 5, 2017 and a corresponding publication deadline of April 4, 2018. The gender pay gap (GPR) figures must be published on both a government-sponsored website and the organisation’s own website (and held on the latter for a minimum of three years).
Are you within the GPR Regulations?
The reporting requirement applies to all companies (whether private or listed), LLPs, partnerships and any other non-public sector employing entity with 250 employees or more at the snapshot date. Broadly the test applies to UK employees, but it can go wider. The 250 employee test is also per company or entity, so groups could have a mix of entities that do or do not need to report.
What do I need to report?
The mandatory numbers you need to publish are:
- Your mean and median gender hourly pay gap, showing the difference between the average male and female hourly pay.
- Your mean and median gender bonus pay gap showing the difference between the average male and female bonus over the preceding 12-month period.
- The proportion of males and females receiving a bonus payment in the preceding 12 months.
- The proportion of males and females in each pay quartile of the company.
- The report must be signed off by a senior person within your organisation, as to its accuracy. Provision of any accompanying narrative on your organisation’s website is optional, although this is your chance to explain why there is a pay gap and what actions you are taking to address any concerns.
What if I don’t report?
Failure to report could result in damage to your reputation and brand, and lead to issues such as loss of clients, suppliers not wishing to work with you, higher staff turnover and issues around recruitment generally, or indeed provide problems for your investor relations. There are no direct monetary penalties but non-compliance is an unlawful act under the Equalities Act 2006 which empowers the Equalities and Human Rights Commission to take enforcement action.
What issues will you face?
The biggest challenges you are likely face are:
- Handling large amounts of sensitive data and ensuring results are handled correctly internally (avoiding ‘leaks’ and misinformation).
- Collating the right payroll data and performing the hourly rate and bonus calculations. What is and isn’t included in the calculation will likely result in a high degree of manual input to the process.
- Understanding the gender pay results so that you can communicate effectively with your workforce.
- Finding the resources with the time and skills to deal with such a large amount of highly-sensitive data.
What should you be doing now?
1 Put together a working team, including any outside consultants. Remember that the team will have access to sensitive pay and bonus/LTIP data for everyone in the organisation.
2 Have a plan and ensure that payroll and HR systems are robust and can deliver the information needed, and in the format needed, to undertake the calculations.
3 Start identifying, collating and extracting data from all internal sources that might be needed to feed into the calculations.
4 Become familiar with the calculations to be done. Different data is needed for different calculations.
5 Ensure senior management are aware of the reporting requirement and process.
6 Do a test run and see what results this produces (be prepared).
7 Don’t delay, it is likely that the process will be a fairly time consuming task.
How can BDO help?
As accountants and reward advisers, BDO collates, processes and analyses large amounts of sensitive data. Our portal technology provides both a project management tool as well as a means of securely sharing pay data and results. We are also experienced in processing data as part of our bespoke share plan reporting service, the BDO Equity Reporter, which will feed in to gender pay figures.