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Global HR Lawyers

Ask About... Retail, Fashion & Hospitality

16 March 2017

Many of our clients in the retail, fashion and hospitality sector face similar HR issues. Each month one of the members of our team will identify an issue, ask how you would deal with it and provide our advice. This month we asked Lee..

I am the Finance Director for a small chain of florists and gift shops. We employ fewer than 100 people. One of our florists recently said something about allowing access to information about employees’ pay she said that the Freedom of Information Act is going to be changed and we will need to publicise individual employees’ pay, so that women can see whether they are paid less than men. When I mentioned it to our MD/owner he went into a bit of a flap. He’s worried because some of our male florists do get paid more than our female florists, although there are reasons for this which are not associated with their gender. He is insisting I find out if it’s true. I can’t find an answer; the Freedom of Information Act doesn’t seem relevant. Is it correct that we will need to publicise employee pay?

A. Yes. The Freedom of Information Act is going to be extended, forcing employers to publish pay information to show if there is a gap between pay for men and women.

B. No. This employee is getting confused. The Freedom of Information Act enables access to information in the public sector. She is probably talking about the Data Protection Act, by which people can ask for personal data about themselves from any organisation, including their employer.

C. Yes. This employee is probably thinking about the new legal requirements for gender pay gap reporting which are due to be introduced soon. These will mean that all employers must publish detailed data about their pay, so it is clear if there is a gap between what they pay men and women.

D. There is going to be a new legal requirement for employers to publish specified data about pay for men and women in their organisation. However, this doesn’t apply to small businesses.

The correct answer is D.

The new Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 apply to some private and voluntary sector employers. Their stated aim is to help reduce the on-going pay gap between men and women in the workplace. There are very similar rules for public sector employers.

Employers must publish six figures: their mean and median hourly pay gap; their mean and median bonus pay gap; the proportions of men and women receiving bonuses; and the number of men and women in each of four pay quartiles. This is done by using data for the pay period which includes the “snapshot date” of 5 April. The figures must be published on an annual basis, with the first reports being produced on or before 4 April 2018, based on a 5 April 2017 snapshot date.

To assist employers in meeting their reporting obligations, Acas has published non-statutory guidance.

The Regulations apply to “relevant employers”, which means employers with 250 or more “employees” on the snapshot date of 5 April. This means that your business does not currently need to report, although it may do if the business grows a lot in the future.

It is worth bearing in mind that the Regulations use the broad definition of “employee” and “employment” from the Equality Act 2010. The meaning is “employment under a contract of employment, a contract of apprenticeship, or a contract personally to do work”. This will cover many non-payrolled workers who are engaged directly by employers as consultants, independent contractors and casual workers.

There is no specific enforcement mechanism or sanction for a failure to comply with the Regulations, although the public relations fallout could be considerable and gender pay statistics are likely to be cited regularly by employees in discrimination and equal pay claims.

The Government has suggested that failure to comply would be an “unlawful act” under the Equality Act 2010, which could be investigated and enforced by the Equality and Human Rights Commission (“EHRC”). This position is echoed in the ACAS guidance.

From a reputational perspective, it is unlikely to be advantageous to decide not to report at all, even if the statistics do not look favourable. However, the lack of enforcement means that it is less critical if employers make a genuine mistake about what the Regulations require.

Lewis Silkin can advise large employers on producing their first gender pay gap reports by April 2018. We understand that addressing the gender pay gap is also about wider HR and employment relations issues such as hiring, promotion and appraisal processes. We are ideally placed to help you develop and implement an action plan addressing all the legal, HR, practical and operational challenges.

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