In Focus : Gender Pay Gap Reporting
Where is this up to?
Government launched consultation in February 2016. The
consultation is now closed. Government will publish their
response in Summer 2016, no great changes are expected.
The regulations will be in force in October 2016.
Will it apply to us?
If you employ at least 250 employees, then yes. Many smaller
employers will see this as a good thing, and choose to report
even though they are not covered.
When will it apply to us?
You will have 12 months to publish data on pay and bonuses.
You use data from your pay period which covers 30 April in
each year. So, publish 2017 data by 29 April 2018, then publish
annually thereafter.
How should it be published?
You must publish online, on (i) your website and (ii) on a
Government website which will collate information for all
employers.
The five reporting requirements are:
What information goes in?
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•
•
•
•
Anything else?
Anything unclear?
Guidance / help?
The difference in mean average pay.
The difference in median average pay.
The numbers of men and women in each interquartile
pay range.
The difference in mean bonus pay
The proportions of men and women receiving bonus
This must be accompanied by a statement of accuracy signed
by a director or equivalent. You may add voluntary information
including explanations and steps being taken to improve a gap
or gaps.
Plenty! Some early misconceptions are that the publications will
require £’s. However, under the regulations, only %’s need be
rd
shown (other than the 3 requirement above which is
headcount). Also, whilst many understand the requirement to
publish pay and bonus detail separately, bonus is included in
ordinary pay if you pay bonus in the pay period including 30
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Co-operatives UK will be supporting members in the build up to
2018 publications. This starts with a pilot in 2016. For more
details see overleaf.
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Co-operatives UK Gender Pay Reporting Pilot
Co-operatives UK is running for members a pilot of the gender pay reporting process, in its current
legislative form, using 2016 data. We will collate results in Summer 2016, and report back to
participants.
We will not share your data with anyone else (including members and participants). However, we
will generate average data for participants so we can return to you a report against averages
amongst participating Co-ops.
Our objective is to gain working data to inform the development of guidance on
(i)
(ii)
(iii)
(iv)
how to report,
dealing with difficult data elements,
what voluntary explanations or information members might wish to add, and
steps you can take to improve your numbers,
then through our HR forum share what works well in delivering results in tackling gender pay.
In piloting now members will gain some ground in preparation for the regulations when they are
published in their final form, which we expect will be June/July 2016. We expect the regulations to
be accompanied by guidance and you will see from below that guidance would be welcomed in
many areas.
Interested in participating? Please register your interest with me [email protected] so I can
ensure that you receive our updates. Please let me know who will be your lead contact.
How to develop your data for the pilot
What follows is a guide and sequence to developing a dataset to generate the pilot gender pay
report.
Contact me if you have any queries; all queries will help us develop our guide for members. We will
collate a Q&A of all queries received.
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Securing the data
Scope
Your data should include all employees, which means excluding self-employed workers and
contractors. Exclude agency workers where they are paid by the agency, not employed by you.
Exclude directors, except where they are also employees. In the latter case, include only earnings
from employment and exclude fees or expenses from their directorship.
The data should be taken from your pay period which includes pay for 30 April 2016. This is
regardless of the length of the pay period (e.g. weekly or monthly paid). Care is needed, where pay
is paid in advance or arrears; you take the pay which is paid FOR the period including 30 April 2016.
So, for an employer who pays on the first of each month, monthly in advance, the pay period used
is the one which runs on 1 April 2016.
Although this is likely to be a point to be refined following the consultation outcome, on the basis
of the commentary summarised below it is considered that those on zero-hours contracts should
be excluded from the calculations.
Data fields
The essential data you will need is:
(i)
(ii)
(iii)
(iv)
(v)
Sex
Basic hours
Pay
Bonus Pay in the pay reference period
Bonus Pay in the 12-months preceding 31 April.
Sex
Follow your records. Treat people in accordance with their gender identity. Further information on
gender recognition can be found under the following link:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484855/The_recru
itment_and_retention_of_transgender_staff-_guidance_for_employers.pdf
Basic hours
These are contracted hours, the minimum hours each employee is employed to work. It should be
the number of hours stated in the employee’s statement of particulars of employment as required
under section 1 of the Employment Rights Act 1996. Overtime hours are not included (nor is
overtime pay).
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It is believed that due to choosing ‘basic pay’ and excluding ‘overtime’, the draft regulations as they
stand require only an employee’s basic working week as determined by their contractual basic hours
to be included. This is supported by reason of the fact that overtime (which is to be ignored) usually
means hours worked over the employee’s basic normal working week (as opposed to hours above a
normal full-time working week).
There are interpretation conflicts caused by the regulations stating that gross hourly rates of pay are
determined by weekly pay divided by ‘weekly paid basic hours’. There could be some argument in
future as to whether this was intended to include hours over the contractual basic but beneath the
full-time threshold, paid at basic rate. Arguably, it may be intended to include all hours paid at basic
rate; these are some of the issues requiring clearer drafting and guidance.
Commentators are unanimously suggesting that applying the guidance as it stands, you should
exclude hours beyond an employee’s normal basic hourly working week. This will by implication
mean excluding those on zero-hours contracts, every hour they work is overtime under the
traditional definition.
Where hours have been changed since appointment, use new basic hours. If there has been a
variation of basic hours during the pay reference period, you will need to ensure that the total basic
hours are correct (i.e. the actual basic hours worked during the pay reference period, as opposed to
the basic contractual hours prevailing on the pay run date).
Pay during the pay reference period
Include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Basic Pay
Paid leave / holiday pay
Actual maternity pay / other parental pay
Sick pay
Area allowances
Shift premium pay
Bonus pay (profit sharing, productivity, performance and other bonus or incentive pay,
piecework and commission, long-term incentive plans and the cash equivalent value of
shares on the date of payment, profit distributions to employee members of a workers Coop)
Cash for car allowances paid through payroll
On call pay
Standby pay
Clothing allowances
First aid / fire warden allowances
Employee dividends
Vouchers (where employees are awarded vouchers with a cash value)
Basic pay is post salary sacrifice. Once swapped for a benefit in kind, pay has in cash terms been
varied. Do not use pre salary sacrifice data.
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Ignore:
•
•
•
•
•
•
•
•
•
•
•
Overtime (any time worked in excess of contracted hours. Exclude overtime even if the
hours are below the normal full-time working week, usually paid at plain time, or paid at a
premium rate)
Expenses
The value of salary sacrifice schemes
Benefits in kind
Redundancy pay
Arrears of pay from another pay period
Tax credits
Deductions; PAYE for tax and NI (employers and employees), pension, student loan
repayment and voluntary deductions.
Staff discount
Director’s fees or expenses.
Membership dividends
The inclusion of bonus in the ‘pay’ calculation will mean that pay gaps may be inflated where in the
pay reference period including 30 April 2016 an annual performance bonus is paid. However, there is
no exclusion of an annual bonus from the ‘pay’ calculation, indeed they are as a ‘bonus’ expressly
included. So annual bonuses are to be included.
Bonus Pay during the previous 12 months
Collate also data on bonus pay paid in the 12 months preceding 30 April 2016.
As in the pay calculation, bonus includes profit sharing, productivity, performance and other bonus
or incentive pay, piecework and commission, long-term incentive plans and the cash equivalent value
of shares on the date of payment. Include the value of vouchers at face value. Include any funds
distributed to membership accounts as an employee benefit but exclude any dividend which accrues
by reason of membership only or on the basis of trade with the Co-op. Include profit distributions
which are made to employee members of a worker Co-op.
Making the calculations
If you wish, send us your raw data as above. We will undertake the calculations for you.
If you wish to do the calculations, then they are as follows.
1.
The difference in mean average pay.
This is achieved by adding up the Pay During the Reference Period, and dividing this by basic hours,
in order to produce an hourly rate for every individual.
Then, calculate a mean male hourly rate (add up all hourly rates for males, divide by the number of
males). Do the same calculation for females to produce a female mean hourly rate.
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Then, undertake the following calculation:
[[Mean male hourly rate MINUS mean female hourly rate] DIVIDE Mean male hourly rate] MULTIPLY
100.
The figure produced is the percentage difference in mean average pay.
2.
The difference in median average pay.
Using the hourly rates calculated as the first step under 1. above, then place male pay in numerical
order, from lowest to highest, then choose the middle value. If there are two middle values (produced
from an even number of males) then take the two middle values and divide them by two to produce an
average. This produces male median pay.
Undertake the same calculation for females.
Then calculate:
[[Male median hourly pay MINUS female median hourly pay] DIVIDE male median hourly pay]
MULTIPLY 100
The figure produced is the percentage difference in median average pay.
3.
The numbers of men and women in each interquartile pay range.
There is more than one interpretation of what interquartile range means under the draft regulations. It
could be argued to mean taking the highest and subtracting the lowest pay rate and dividing by four to
give you four segments which are equal in terms of £’s. However, it may also mean, which is more
common amongst reward practitioners, segmenting the number of employees (stacked in ascending
pay rate) into quarters rather than the £’s in the pay range.
Representatives from the Government Equalities Office are reported to have suggested that the
Government intended the former calculation to be made.
However, the wording regulation itself clearly supports the latter calculation. This is because the
manner of calculation refers to listing rates of pay for every individual in order of increasing value. The
former calculation would not require that, as it is simply a product of the highest and lowest rates of
pay.
For the purposes of the pilot, we do not want to assume that the regulations have been incorrectly
drafted, so we will ask members to report based on interquartiles developed as follows:
First, list every employee’s hourly rate in ascending order. Divide the total number of employees by
four to determine four equal segments in terms of overall number of employees. Adopting this means
that the total number of men plus women in each quartile will be the same but the proportions are
likely to differ.
Report the number of men and women in each segment as follows:
A = lowest pay to first quartile
B = first quartile to second quartile
C= second quartile to third quartile
D= third quartile to highest pay
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4.
The difference in mean bonus pay in the last 12 months
Unlike the hourly rate calculations which include bonus in steps 1-3, calculating the difference in mean
bonus pay involves looking at the 12 months preceding 30 April 2016.
Add all bonus payments to males and divide by the number of males to produce the mean average
bonus for males.
Do the same calculation for females.
Then calculate:
[[Mean male bonus MINUS mean female bonus] DIVIDE male mean bonus] MULTIPLY 100.
The figure produced is the difference in mean bonus pay.
5.
The proportions of men and women receiving bonus in the last 12 months
This is a relatively simple calculation of:
(i)
(ii)
Percentage of females receiving a bonus, and
Percentage of males receiving a bonus.
Presenting the calculations
A report containing the information required by the regulations need only contain the following
information (random example data inserted):
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Example minimum report
Data reported as at 30 April 2016
Mean average female pay is 81% mean average male pay.
Median average female pay is 85% median average male pay.
The numbers of men and women in each interquartile pay range are follows:
A:
1000 males, 2000 females
B:
1200 males, 1800 females
C:
1800 males, 1200 females
D:
2200 males, 800 females
Mean average female bonus pay in the preceding 12 months was 60% mean average male bonus
pay.
67% of men received a bonus in the last 12 months, 40% of women.
[Statutory statement of accuracy / director’s signature]
Next steps
Send me either your raw data or the minimum required report as set out above. As stated earlier,
your data will not be shared with anyone else, we will use it only to collate average data to return to
participants.
Returns by 31 May 2016 please.
Kate Fielding
HR Reward and Policy Manager
[email protected]
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