Employers required to include bonuses in gender pay gap details
Various Sunday papers yesterday reported on the Government's announcement to require large employers (i.e. those employing 250 or more employees) to publish information about their bonuses for men and women as part of their gender pay gap reporting. This follows consultation over the Summer when views were sought on the Government's manifesto commitment to require large employers to publish gender pay information.
The Government hopes that through increased transparency around gender pay differences, employers will be forced to address any workplace inequalities identified and "will be encouraged to establish an effective talent pipeline that helps women to fulfil their earning potential".
While the overall gender pay gap may have narrowed in recent years (and be at its lowest since records began in 1997), the overall gap for all employees remains at 19.1%. This means men are paid more than their female equivalents on average. Of course, there are many potential causes for this gender pay gap, but one of the biggest drivers of gender pay discrepancy is thought to be bonus pay, which remains among the least transparent forms of pay. It is perhaps of no surprise that in a drive for greater transparency around gender pay differences, bonus arrangements should therefore come under the spot light.
However, while the Government's press release attracted a lot of coverage yesterday, the Government has yet to publish a formal response to its consultation and yesterday's press release offered very little detail beyond the reported headlines. In the consultation document, the Government hinted at employers having to show the difference in average earnings of men and women by grade or job type, but there was no mention of having to report separately on different elements of pay.
The level of granularity that will be required by the new regulations when presenting gender pay gap information has yet to be confirmed. But it would seem that after blocking the original proposal for gender pay gap reporting, the Government is now fully behind it and intends it to be more than just a box-ticking exercise. Employers should therefore start thinking now about how they might take constructive steps to meet their future obligations and tackle any workplace inequalities identified.
For us, gender pay gap reporting is part of a wider agenda to encourage greater transparency and ethical leadership. In November we will be hosting the first of our ethical leadership events focusing on the new Modern Slavery Act and it is our intention to run further events on ethical leadership in the new year, including on pay. In the meantime, we would be very happy to visit your organisation to help you understand what needs to be done to address the new gender pay gap reporting obligations and then work with you to develop practical solutions. To arrange a meeting, please do not hesitate to contact either me or Richard Kenyon or any other member of the team.