Overview of provisions
Regulations coming into force in April 2017 mean that employers with 250 or more employees are now required to report on gender pay gaps within their organisation.
The first annual reports are to be published by 5 April 2018, but will relate to pay as at 5 April 2017 and bonuses paid in the 12 months prior to 5 April 2017, so the period for data collection has for many already begun.
Professional partnerships and LLPs, like many businesses, will often have a significant gender pay gap. Therefore a key consideration is how to address the messaging surrounding their gender pay gap report and what (if any) remedial action should be taken to address it.
Partners and Members of English LLPs
The draft Regulations specifically exclude partners in partnerships and members of English LLPs. The effect of this exclusion is that partners and members will not count towards the 250 employee threshold beyond which reports must be filed and that partners and members will not be taken into account when calculating pay gaps.
In rare circumstances the exemption for LLP members will not apply. These relate to periods where an LLP is not trading or is in liquidation and so should not ordinarily create an issue for professional services LLPs.
Overseas partnerships and LLPs
The Regulations do not specifically address partners in overseas partnerships and LLPs. An overseas partnership or LLP which would reach the 250 employee threshold if its partners are included should seek advice as to whether those partners can be excluded from the threshold and the report.
However, international firms can take some comfort that only UK employees are taken into account.
The Regulations assess firms on a ‘per legal entity’ basis. Employees within group structures are not (and cannot) be aggregated.
What has to be reported on?
Those firms which must publish a report will need to assess:
- The mean hourly gender pay gap between all men and women
- The median hourly gender pay gap between all men and women
- The mean gender bonus gap between men and women
- The median gender bonus gap between men and women
- The percentage of men and women participating in the bonus
- The distribution between men and women in salary quartiles.
Pay and bonus
Pay for these purposes includes basic pay, holiday pay, and premia (such as London allowances and payment for ancillary duties such as being a nominated fire marshal). By contrast, benefits in kind, redundancy pay and expenses are excluded from counting towards an employee’s pay.
“Bonus pay” is defined widely. For the separate bonus reporting figures (items 3 to 5 above) all bonuses paid in the 12 months before the 5 April “snapshot date” must be calculated.
Bonus pay includes cash (other than ordinary pay), payments for productivity, and performance pay schemes and other bonus or incentive payments including the sharing of profits.
Recognising that disclosing pay levels is commercially sensitive, the pay range itself is not required to be published and pay bands can be instead identified in the report as Band A, B, C and D.
Where will the report have to be published?
The report including the required data must be published on the employer’s UK website and be accessible to its own workforce and the public for at least three years following publication. It must also be certified as true by a director, partner or, in the case of a UK LLP, designated member.
The Government will maintain a website on which the information must be uploaded, although no further details have as yet been provided.
What should I do now?
If your firm has more than 250 UK employees, advance planning is essential to ensure that pay gap data is captured and interpreted correctly and that any issues which may arise from the report can be addressed.
How can we help?
We are working with a number of clients on their responses to the Gender Pay Gap reporting requirements. Please contact Daniel Sutherland or Joanna Chatterton if you would like to know more.
For further details on how we can help with Gender Pay Gap reporting issues, please click here.