U.K. pay equity passes another milestone–With implications this year

The countdown to the proposed introduction of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the ‘Regulations’) in October has passed another milestone. On 12 February, the government published its response to the feedback from last year’s consultation on disclosing the gender pay gap.

When introduced, all U.K. employers with 250 or more ‘relevant employees’ will have to comply with the new gender pay gap reporting regulations.

When introduced, this will mean that all employers with 250 or more ‘relevant employees’ will have to comply with the new gender pay gap reporting regulations. Relevant employees are those who ordinarily work in Great Britain and whose contracts are governed by U.K. legislation.

The deadline for publishing the first annual disclosure is 30th April 2018.

What Will Need to be Disclosed?

  • The difference in mean and median ‘pay between all male and female employees (part time, full time, all grades/levels)
  • The proportion of men and women in each ‘pay quartile’.
  • The difference in mean bonus paid to male and female employees
  • The proportion of men and women receiving bonuses
  • ‘Pay’ will be calculated on the relevant dateof 30th April 2017, and every 30th April thereafter.
‘Pay’ includes: ‘Pay’ does not include:
  • basic pay
  • maternity pay
  • sick pay
  • paid leave
  • area allowance
  • shift premium pay
  • car allowances
  • on call allowances
  • standby allowances
  • fire warden/first aid/clothing allowance
  • bonus pay
  • benefits in kind
  • expenses
  • redundancy pay
  • arrears of pay and tax credits
  • overtime
  • value of any salary sacrifice

 

Bonus pay is all ‘performance related pay’ whether individual or company related, short or long term.

‘Bonus’ includes:

  • Profit sharing
  • Performance bonus
  • Productivity bonus
  • Other bonus/incentive pay
  • Piecework
  • Commission
  • LTI plans/schemes (including those linked to company and personal performance)
  • Cash equivalent value of shares on date of payment

In contrast to ‘pay’, bonus will include all applicable payments paid during 12 months before the relevant date, i.e. not a snapshot at a fixed date.

This means any bonus payments made from May 1st 2016 will be included in the regulations.

How Will it be Implemented?

Any bonus payments made from May 1st 2016 will be included in the regulations.

Companies will need to publish the information on their own website for 3 years as well as upload the data to a government website (with ‘league tables’ proposed to be published by industry sector for each organisations’ ‘pay gap’).

A director or equivalent will need to sign-off the pay gap report in a written statement.

Key dates:

  • March 11th 2016 – Consultation on draft regulations close
  • May 1st 2016 – Bonus payments (bonus, commission, LTIs etc.) made after this date will be included in the first set of gender pay gap reports if these draft regulations go ahead
  • October 2016 – Expected date of new regulations to become law
  • April 30th 2017 – First ‘relevant date’ – first set of gender pay gap reports will be based on ‘pay’ levels at this date
  • April 30th 2018 – Deadline for first gender pay gap reports to be published on company websites

What Should be Done Now?

Companies need to identify if they have the data, skills and resources to run the gender pay gap analysis. For many the pay gap figures may be large, so if possible it is advised to run an analysis of your current pay gap to identify a base line, and give forewarning of any problems.

Leadership also need to be briefed to ensure they are aware of the legislation details, risks and that they will be publicly accountable, and will need to sign off the gender pay gap report.

Take Our Survey

To help understand organisation reactions to the regulations we are surveying our clients to see how well they are equipped to meet the requirements and any changes to reward and talent programmes that have been made or are being considered. Findings from the survey will be summarised and reported on an anonymous basis, and will be provided to participants free of charge.

If you would like to participate, please click here. The survey closes on 14th March 2016.

 


 

Daniel Puckey Guest blogger Daniel Puckey is a Senior Reward Consultant in Willis Towers Watson’s London office. He has spent 15 years working with organisations to optimise investment in all aspects of their compensation and benefits programmes. He wrote Willis Towers Watson’s response to the U.K. government’s first consultation on their gender pay reporting regulations.

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