Robin Turnbull, a senior solicitor at Anderson Strathern discusses the main points of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which came into force in April 2017, in the wake of the recent BBC pay revelations.
The new regulations require all private sector employers with more than 250 employees to disclose information about their gender pay gap.
The BBC’s experience from revealing its top earners’ pay has given employers an idea of the impact of the new gender pay gap reporting rules.
The BBC’s experience
The BBC has recently released the salaries of 96 of its highest earning stars. 62 are male and 34 are female. The top seven earners are all male.
The published salaries have led to criticism of the BBC. In response to the figures being revealed, it has been reported that the Prime Minister has said that she thinks the BBC “is paying women less for doing the same job as the men.”
Although the publication of this information was in order to comply with the BBC’s new Royal Charter rather than as a result of complying with the obligations under the Regulations, the resultant backlash demonstrates the potential reaction when those employers to whom the Regulations apply ultimately comply with the Regulations.
What information needs to be disclosed?
The information that needs to be disclosed under the Regulations includes the following differences between male and female employees:
- Average pay
- Median pay
- Bonus pay
- Median bonus pay
- Are employers allowed to explain the difference?
Employers are not obliged under the Regulations to give an explanation for any gap in pay. However, as the BBC’s experience seems to show, the information revealed could cause uproar amongst staff and potential reputational damage where no explanation is provided.
Employers are permitted to provide an accompanying narrative to put the figures into context. The narrative may, for example, explain the impact overtime has on the figures, the extent to which overtime is routinely worked, and the proportion of men and women regularly working overtime. Employers may wish to explain where skills shortages for particular roles require a salary premium, particularly if there is a shortage of applicants of one gender. It may also be worth explaining where discrepancies in pay exist for historical reasons which are unrelated to gender (such as a previous TUPE transfer). If there is a plan in place to close the gap, that too may be worth explaining.
A clear explanation for any apparent differential may be helpful in mitigating reputational damage and the likelihood of claims.
Is paying one sex less than another unlawful?
Broadly speaking, employees are entitled to “equal pay for equal work”. The gender pay gap therefore does not necessarily indicate that an employer has done anything unlawful. Potential Claimants will need to establish that there are others, of the opposite sex, performing equal work who are being paid more for that work – whether work is “equal” can be a complex assessment. Aside from claims which stem from the Equal Pay Act 1970, there are other claims which may be available under the Equality Act 2010.
What should employers do at this stage?
- Assess whether the rules apply to them.
- Collate the required information.
- Consider whether any context can be given behind any apparent pay gap and the pros and cons of including that explanation.
- Consider whether any apparent pay gap requires or merits steps to be taken to close that gap.