The Gender Pay Gap Reporting Regulations come into effect in April 2017 and require employers to publish details of their gender pay gap on an annual basis.
Reporting is mandatory for all organisations with over 250 employees working in, or sufficiently connected to, Great Britain. Northern Ireland is currently excluded. These new requirements will impact any global business with sufficient GB headcount.
Employers must publish six different metrics, including the percentage differences in hourly pay and bonuses between men and women and the proportion of women in each pay quartile.
The information will be publicly available and is likely to be considered by employees, potential job applicants, the media and in some cases by clients. It must be signed off at director level.
Employers have until 4 April 2018 to publish their first set of data, but it must be based on a "snapshot" of pay data as at 5 April 2017.
What are the challenges?
The rules are complex and not always clear. Being compliant may require employers to take judgement calls on tricky issues such as whether particular payments or employees are in scope.
For example, the calculations may need to include some consultants (depending on status and availability of data), some expats on assignment to Great Britain (depending on which organisation employs them and the GB headcount of that organisation), and those posted overseas if they retain a sufficient connection to Great Britain.
Employers need to find practical solutions to these challenges. They are looking at developing internal guidelines and protocols to try to eliminate the need for time-consuming person-by-person analysis. They also want to ensure that, as far as possible, their calculation approach and their pay gap figures are in line with their peers.
This is tricky because organisations are finding that their existing group structures, timing around certain bonuses and allowances and other arrangements can have a distorting effect and mean that peer comparisons are not entirely like for like.
For example, in some groups, the board may be out of scope of the calculation if they are employed by a group company with fewer than 250 employees. Organisations that pay bonuses or role-based allowances in April may also be disadvantaged in comparison with organisations with different timing arrangements.