The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 come into force on 1 October 2016. These regulations are aimed at tackling the gap in pay between genders, which is still estimated at 19.2%.
Which organisations will the Regulations apply to?
The Regulations will initially apply to private sector employers (which includes charities and independent schools) with 250 or more employees.
One of the interesting aspects for schools is which staff fall within the definition of ‘employees’. In the first draft of the regulations this was defined narrowly and would only cover staff engaged under a contract of employment. However, in response to the consultation it is likely that a broader definition will be adopted, which may then bring in casual staff.
Schools close to the line may need to err on the side of caution to avoid failing to comply with the requirements should staff numbers increase over the threshold. It may also be a consideration if schools are choosing to contract in services such as cleaning or catering which may result in an influx of additional staff. Even schools with less than 250 staff may elect to comply with the Regulations to demonstrate best practice, or may find themselves under pressure to do so.
What information needs to be published?
Schools will be required to report on a range of data:
- The difference in mean pay between genders (expressed as a %).
- The difference in median pay between genders (expressed as a %).
- The number of men and women in each quartile of the pay range.
- The difference in mean bonus payments between genders (expressed as a %).
- The proportion of men and women in the workforce that received a bonus.
Schools employ staff on a diverse range of working arrangements and patterns. It will be necessary to calculate a gross hourly pay rate for each member of staff, to generate average figures which are not affected by the number of hours worked. Determining the appropriate ‘hourly rate’ may well present practical difficulties for schools that often have staff working a wide range of hours and working weeks in a year, as well as many staff who do not necessarily have a prescribed number of working hours.
Schools will have to establish their full pay range and then divide this into four quartiles for the purpose of publishing the information.
Pay will include basic pay, bonuses, maternity pay, sick pay, shift premiums and other allowances. It will not include overtime, the value of salary sacrifice schemes or benefits in kind. This has the potential to skew the figures for schools that use salary sacrifice arrangements for school fees, or other benefits. The omission of benefits in kind, which would include the provision of staff accommodation, is likely to be helpful for schools but may also mean that the information does not reflect the true value of remuneration packages provided to some members of staff.
Pay data will be based on 30 April pay roll each year. Schools will need to be prepared to capture the relevant data in April 2017, with the first reports required by April 2018.
The reports must be published on the school’s website every year, and remain there for at least three years. The information must also be uploaded to a government website.
What are the potential implications for schools?
The requirement to publish the mean pay gap is intended to identify whether women are over-represented at the low earnings end of the spectrum and under-represented at the high earning end. It will also be necessary to publish the median difference, in order to represent the ‘typical’ difference.
The objective of reporting on the gender breakdown across the quartiles is to identify where women are concentrated across the pay range and, if there is not an even spread, prompt scrutiny as to whether there are any obstacles to their progression. The quartiles will identify the lowest and the highest pay rate, which may also identify or cause speculation as to the levels of pay of the highest earners in the school, most notably the Head.
The government’s initial intention is for employers who do not comply to be ‘named and shamed’. They will also produce ‘sector’ league tables to compare the gender pay gaps between different type of sector organisation. Whilst it may be anticipated that financial and professional services will feature at the top of such lists, it will be interesting to see how the independent school sector fares. The government has also committed to review whether civil or criminal penalties for non-compliance should be introduced in due course.
The information could also be used by employees and their trade unions to challenge pay, with the threat of equal pay litigation where differences in pay are identified. Areas of greatest risk are where there are pay anomalies for staff who undertake the same or similar work, or roles where there is gender segregation.
Schools also need to be alert to the reputational risks if the reported information identifies pay differentials between men and women, which is likely to undermine the values and ethos they aim to promote.
Managing the potential risks
Schools have until April 2017 to analyse their gender pay gap and whether the gender pay report is likely to create any legal or reputational risks.
We would urge schools not to delay in getting to grips with this but ensure that systems are in place as soon as possible to capture the necessary data so that a practice run can be carried out. If this identifies potential risks, then schools can consider strategies to manage this ahead of time. It may be helpful for schools to undertake this preparatory work with the support of their legal advisers to ensure this can be assessed within the protection of legal professional privilege. Schools will otherwise need to exercise some caution and be aware that any ‘practice’ data or preparatory reports have the potential to be disclosable in any future litigation or as part of a data subject access request.
It may be necessary to take steps to identify and address any pay differentials. Alternatively, if there is a good reason to explain any differentials, steps can be taken to evidence this. We anticipate that employers will be encouraged to submit a ‘narrative’ alongside the gender pay report and this may be a critical tool to explain results or promote positive aspects.
Schools may also want to consider whether it is actually helpful to publish more data if this would create a more accurate picture, for example comparing ‘like’ employees rather than teachers with hourly paid teaching staff, who may not undertake a full range of duties and responsibilities.
Schools also need to be alert to the reputational risks if the reported information identifies pay differentials between men and women, which is likely to undermine the values and ethos they aim to promote
What steps should schools be taking now?
- We would recommend that schools use the time before April 2017 to ensure that they are fully prepared for the Regulations”
- Ensure that your school has appropriate systems in place to capture the relevant data.
- Take the opportunity to review your pay policy to ensure this is transparent and legally compliant.
- Ensure that the school has an up to date Equality policy and that staff have had training on this (particularly those involved in recruitment, promotion and pay decisions).
- Ascertain the gender pay gap – do a practice run.
- Analyse the legal, organisational and reputational risks of the gender pay gap, and consider a strategy to address these.
- Take steps to ascertain the cause of any gap and the options around how it can be closed.
- Consider the presentation of the gender pay report and the appropriate narrative.
Alice Reeve is an employment partner at leading education law firm Veale Wasbrough Vizards. Alice can be contacted on 0117 314 5383 or at email@example.com.