Gender Pay Gap Reporting: The story so far...

Connie Cliff: Hello and welcome to Gowling WLG's podcast Gender Pay Gap Reporting: The Story So Far… I am Connie Cliff and I am joined today by a director in our Employment Labour and Equalities Team, Louise Clifford. So Louise can you start off with a quick reminder of some of the key features of the Gender Pay Gap Reporting regime? Let us start with the key date and who needs to publish a report.

Louise Clifford: Yes, so the first of the key dates is actually already passed, this is what is known as the snapshots date and that date is different depending on whether you in the private or the public sector. For the private sector that was 5 April 2017 and the for the public sector 31 March 2017. The reason that date is key is because it effectively dictates the pay period that you use for the purposes of collecting pay data to produce your organisation's report. The second key date is the actual reporting deadline. This is still some way off. The deadlines are 4 April 2018 if you are in the private sector and 30 March 2018 for the public sector and that is the last day by which the employers who are covered by the regulations will be allowed to report their results.

Connie: And who exactly is covered by these regulations?

Louise: OK, it is not all employers at the moment. It is large employers, those with 250 or more employees on the snapshot date but what you need to remember for the purposes of these rules is that "employees" are not just those people who will work under a contract of employment, it actually includes the broader category of "employees" that we are familiar with from equality legislation so that includes for example apprentices and also a group of people known as workers who contract personally to provide their services.

Connie: If I am somebody who is covered by these, what do I actually need to report on? What do I need to include in my report?

Louise: There are three main obligations. So the first is the requirement to report on the average difference between hourly rates of pay for men and women and the average has got to be assessed on both the mean and the median basis. The second obligation is to report on the difference between (again on the mean and median) bonus pay for men and women and also the actual proportion of men and women receiving a bonus. So you do not need to report on actual numbers of men and women receiving a bonus but you do need to report on the proportions. The third requirement is to report on the proportion of men and women in each pay quartile. What we mean by pay quartile is basically each quarter of the business when you list them in terms of hourly rate of pay from the lowest paid to the highest paid. Effectively you have four quartiles each comprising the same number of employees. So in an organisation of 1,000 employees you would have 250 employees in each quartile and the effect of the obligation is to report on the proportions of men and women in each of those four quartiles.

Connie: Once I have gathered all this information and I have put my report together what do I need to do with it? Do I need to publish it someplace?

Louise: Yeah, so there are two publishing requirements. First of all it has got to be published on the employer's own searchable website and it needs to stay there for three years so employees will be able to go back and look at how employers are doing year on year. Secondly, employers have to publish on a designated government portal which again will be searchable to allow comparisons to be made between different employers.

Connie: OK, so if you are a private employer you have until 4 April 2018 to publish your first report, but I understand that with the portal already up and running and that some employers have already published early. Is that possible?

Louise: It is possible to publish early - yes - and the government portal is now live and some organisations have chosen to do that. We are now approaching some three months since the rules were introduced and at the last count it was just a handful. So fewer than 20 at the last count had actually published their reports. From kind of looking through those who have reported and the narratives that have been produced for those that have issued their statistics, if you were to draw out a common theme I think what I would say is that those who have reported tend be organisations that have a relatively positive story to tell. So for example, they might have a relatively small or no gender pay gap as between men and women or there might be some other risk reducing factor such as they do not operate bonus arrangements or they might have a job evaluation scheme whereby they can be confident that employees are being paid equally and there were no equal pay issues.

Connie: OK, so most employers are going to take advantage of the full period …

Louise: I think that is right, yes.

Connie: As people are starting to compile this information and start working on the reports, we are now three months into the reporting year, have any emerging issues come out from clients you know that are compiling the reports?

Louise: I think issues are going to be very specific to each organisation whether it is an individual entity or part of the bigger group structure, what their records are like and the type of organisation they are. So I think issues are going to be different depending on the organisation but there are some issues that, you know, people are starting to talk about and encounter as they go through their planning as they look towards the April or March 2018 deadlines for reporting. One of the issues that I know some organisations are thinking about is what you do if you are in a group company and you are part of a broader structure? And the legislation itself is quite clear on that. The requirement is for each company within a group to report its own requirements that meets the 250 employee threshold. That said there might be some organisations where some entities within a group will be covered and some won't. And there might then be a broader issue for the group as to whether they want to report statistics on a group wide basis. That will not relieve them of the obligation to report individually but it might in, some cases, be a sensible approach to take if you want to kind of protect your balance of one set of statistics with another. Another issue that employers are starting to talk about is whether to include narratives with their reports. It is not compulsory but it is something that I expect a lot of larger employers will be wanting to do. Most employers, particularly if they are publishing relatively large gender pay gaps, will probably want the opportunity to explain why their results are as they are and crucially what the might be doing to address those results, but again it will be for each organisation to assess whether that is appropriate in its own circumstances. A third issue I think is cropping up for a lot of employers is perhaps a lack of paperwork around some of the information that they require. So, some organisations, for example, may have issues with identifying which employee is employed by which group entity - because they may have moved around and the paperwork may not have been updated. Alternatively, you know, there might be a lack of paperwork which explains why particular payments have been made so in some circumstances we have seen perhaps bonuses and allowances being rolled up together and employers are having to do some kind of investigation to work out why those payments have been made. So I think that there are a lot of issues, as I say very much specific to particular organisations,but the key issue for employers is to allow enough time in the planning to make sure that you can resolve those issues and find a workable solution.

Connie: So make sure we have enough time to actually gather this information …

Louise: Exactly that is right, yeah.

Connie: … as best you can. OK, I have done all that, spent my time ploughing through piles of paper and records, got my report together and I find out what my pay gap is and perhaps I do have a pay gap at various levels. Does that mean I need to be concerned about potential equal pay issues in my organisation, is a pay gap indicative or necessarily indicative of equal pay issues?

Louise: Well, no it is not is the short answer. A gender pay gap is basically a simple measure of average differences between pay for male and female employees. Equal pay is a specific legal concept that requires that men and women are paid the same for equivalent work and that might be equivalent in the sense of it is exactly the same job or it might be work that is actually quite different but is of equal value or has been rated the same as another job in an employer's own job evaluation study. So obviously with the gender pay gap reporting you are not looking at differences in pay on a job by job or even a grade by grade basis. So even if you do have a gender pay gap that will not give you the kind of information which employees might need to bring an equal pay claim for example. Also it may be that the gender pay gap is indicative of, you know, a particular sector you are in, the fact that you have predominantly male or predominantly female workforce. It may indicate that you have a lack of female progression to the most senior jobs in the organisation but neither of those issues would necessary mean you have an equal pay issue it may mean that you have underrepresentation issues that you want to address but it does not necessarily mean that you are paying a man or a woman less than a comparator of the opposite gender for doing equivalent work. And, in fact, it would be very difficult for employers to have a completely flat structure where they have no gender pay gap. It is naturally going to fluctuate over time and particularly in smaller organisations, you know, relatively small differences at the senior end or small changes at the senior end of the organisation are going to influence the gender pay gap quite significantly. I think the thing to look out for is where you have a stubborn, persistent equal pay gap that is not changing over time and I think to try and mitigate equal pay risks going forward, employers need to be understanding why that might be and whether there is anything they can do to resolve that.

Connie: Thank you Louise this has been very informative and we would like to thank you for listening to us today, goodbye.