Gender Pay Gap legislation: All you need to know

Tim O’Callaghan is a partner in Druces LLP, specialising in advice to the fashion and luxury goods business. In this month’s column, he advises on what you need to know about The Equality Act (Gender Pay Gap information) Regulations 2016, set to come into force on October 1.

A recent study by the Institute of Fiscal Studies concluded that, on average, women earn 18% less than men, with the gap widening to 40% after women have children.

Neither of these figures come as a shock to regular readers of Lingerie Insight, which has reported on and championed the correction of this unsettling trend in recent weeks.

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Our new Prime Minister is another supporter of dealing with this issue. In her very first speech she highlighted the need to make sure that Britain ‘works for everyone’.

It is still, in this lingerie solicitor’s experience, rare, to find men routinely employed in customer-facing sales roles in lingerie retail, and in the view of this occasional lingerie customer, that is entirely right and appropriate.

The difficulty comes higher up the chain, in the positions of management in lingerie businesses. Here, it seems, the invaluable and practical guidance and experience of the female touch is routinely ignored.

It is this inequality that the new government administration is trying to curb, by using blunt, but effective, means of ‘new legislation’ to support its objective.

New legislation
The Equality Act (Gender Pay Gap Information) Regulations 2016 – expected to come into force in October 2016. Deadline for first reports is April 2018.
The requirements (initially) apply
to employers who employ 250 or more people.

What are the requirements?
Relevant employers will be required to publish figures on the organisation’s website in relation to:
1) Gender pay gap – the average hourly pay for women in comparison to the average hourly pay for men;
2) Gender bonus gap;
3) The number of men and women in each salary band (quartile).
They will also need to submit evidence of compliance annually to the government.

Calculating the gender pay gap
This is not the same as equal pay, i.e. it is not comparing pay between men and women of the same seniority/in the same job roles. It is calculated with reference to all male/female employees. It will not, therefore, be a case of comparing two lingerie sales assistants, rather a female sales assistant and male manager.
Employers are required to calculate:
1) The percentage difference between the mean (average) gross hourly pay of women in relation to men.
2) The percentage difference between the mid-point (median) gross hourly pay value of women in relation to men.
3) The number of men and women in each pay quartile.
If you will forgive a foray into mathematics, the way in which the percentage is calculated is by working out the difference between the average pay of all male employees and the average pay of all female employees, and dividing that number by the average pay of all male employees.

Calculating gender bonus gap
This is a separate report that includes all bonus payments made in the 12 months up to and including April 30, 2017.
Likely to include payments such as commission, profit sharing, productivity/performance payments.
Two separate figures: a) difference in mean bonus pay and b) proportion of male/female employees who received bonuses.

Publishing
Employers need to publish the report on their own website and upload it to a government website where it will be available to members of the public.
Companies must publish their first report within 12 months from April 30, 2017.
This information must be kept online for three years to show progress made.

Enforcement:
The draft regulations do not contain any enforcement provisions or sanctions for non-compliance.
However, the government has stated that it will run checks to assess for non-compliance, publish league tables by sector of employers’ reported gender pay gaps and, in some cases, publicise the identity of employers who have not complied with the requirements.

At present, these regulations apply to employers of 250 employees or more, although it is widely expected that this minimum qualifying criteria will reduce. Many campaigners want to see the regulations apply to all employers, however small. This is understandable and, perhaps, the inevitable result of the current equality laws in the UK, the general drift of which is to eradicate all inequality in the workplace.

In the brave-new-world of lingerie retail, it is as indefensible to insist on a lingerie sales assistant as being female as it is to pay male store managers disproportionately on the basis of their sex.

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