In simple terms, the Gender Pay Gap (‘GPG’) is the difference in the average hourly wage of males and females across a workforce.
Since the Gender Pay Gap Information Act 2021 was enacted, employers have been eagerly anticipating the regulations which provide detail on how the GPG is calculated and reported. On Friday 3 June, the Government published the Gender Pay Gap Information Regulations 2022. These Regulations, which are effective from 31 May 2022, provide a framework for employers to calculate the gap in pay between males and females and to publish reports outlining specified information about the GPG.
We recently wrote about the guidance on Gender Pay Gap Reporting, which outlined the previous guidance issued by the government on what the reporting obligations would look like. The Regulations, while broadly following the pattern of the guidance issued, provide clarity on pay calculations and reporting of GPG.
The Regulations provide a number of useful definitions for employers in order to determine the relevant information to include in their GPG reports, including definitions of terms such as “ordinary pay”, “hourly remuneration”, “bonus remuneration” and “working hours”, which will be of use to employers in calculating the GPG.
Organisations with over 250 employees are required to report on their GPG for the first time in 2022.
The Regulations set out a number of calculations which will serve as a guide to employers when compiling their reports, including formulas for the calculation of the total number of working hours, mean hourly remuneration, median hourly remuneration and bonus remuneration.
Calculations
The following calculations will be required in each report:
- The difference between the mean hourly remuneration of relevant employees of the male gender and that of relevant employees of the female gender expressed as a percentage of the mean hourly remuneration of relevant employees of the male gender; a similar calculation should be applied to male and female part-time employees and male and female employees on fixed-term and temporary contracts.
- The difference between the median hourly remuneration of relevant employees of the male gender and that of relevant employees of the female gender expressed as a percentage of the median hourly remuneration of relevant employees of the male gender; a similar calculation should be applied to male and female part-time employees and for male and female employees on fixed-term and temporary contracts.
- The mean, median, and percentage of bonus and benefit in kind payments of male and female employees.
- Information on employees by gender who fall into lower, lower middle, upper middle and upper quartile pay bands.
The employer should place the GPG report on its website, or where it does not have a website have it available in a physical form. It must remain on the website or be physically available for a period of three years from the date of publication. The GPG report should contain a written statement in which the employer sets out its opinion as to the reasons for the differences, if any, in pay referable to gender. It should also outline the measures being taken to eliminate or reduce these differences in the relevant employer’s case.
Conclusion
We advise employers that they should familiarise themselves with the Regulations as soon as possible. It is important for organisations which fall within the GPG reporting requirements ensure they have the necessary internal systems in place to capture, analyse and report on their GPG.
For expert guidance around ensuring full compliance with the new regime, contact a member of our Employment & Benefits team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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