The TLDR on the new UK pay gap reporting regs:
- From April 2017, employers with at least 250 employees (which may include some contractors) in the UK will need to publish details of their gender pay gap on an annual basis.
- The gender pay gap reflects the difference between what women are paid, on average, compared to what men are paid, looking across the company as a whole.
- Employers must publish six different metrics, including the 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 / customers.
- Employers will have until April 4, 2018 to publish their first set of data, but it must be based on a “snapshot” of pay data as at April 5, 2017.
- CALCULATION – The rules are complex and not always clear. Being compliant may require employers to make judgment calls on tricky issues such as whether particular payments or employees are in scope. Employers need to find practical solutions but also want to ensure their calculation approach and their pay gap figures are in line with their peers.
- PRESENTATION – The government is encouraging employers to explain the causes of their gender pay gap and what they are doing about it. Employers will need to consider carefully what to include in this narrative to best manage multiple stakeholders.
- CLOSING THE GAP – The Regulations shine a light on the challenges for employers seeking to close the gender pay gap. Considering existing diversity and inclusion initiatives, and considering how to achieve further progress, is a good first step.
- CLAIMS & AUDITS – The new requirements may prompt more equal pay claims, either because employees misinterpret the figures or because they expose areas of potential discrimination. Some employers are therefore taking a more in-depth look at the discrimination and equal pay risks within their business.
Multinationals Take Note!
- Outside of the US, legislation either mandating or encouraging gender pay gap reporting is on an uptick (see e.g. Germany and Switzerland)
- Unfortunately, a one-size-fits-all approach is not a solution. The legal requirements, types of data involved and comparator groups all vary by jurisdiction which means you may end up with very favorable numbers in one country, and something substantially different in another.
Contact your Baker McKenzie lawyer to prepare an action plan to address key potential risks and meet your compliance obligations globally.