New UK Gender Pay Equity Regulations to Require Expanded Employer Reporting in 2018

Inclusion and Diversity, The UK and European Union

In a move which will certainly be watched carefully in the United States, all British companies with more than 250 employees in the United Kingdom will now be required to provide extensive disclosures on employee compensation broken down by gender—including the average and median hourly pay rate for both men and women—in an attempt to assist in bridging the gender pay gap.  While the compliance deadline is not until April 2018, some companies have begun proactively abiding by the regulations.  These companies, according to a Bloomberg report, have disclosed a significant gap between pay earned by men and women, which amounted to 36 percent more compensation for men at Virgin Money, 31 percent more at asset manager Schroders Plc, 23.4 percent at utility SSE Plc, and 15 percent at PwC.  The new rules impose four distinct disclosures on companies and require the inclusion of all full-time and part-time employees (although limited to only UK employees):

• The mean and median hourly pay gap;
• The mean and median bonus pay gap;
• The proportion of men and women receiving bonuses; and 
• The number of men and women in each of the four pay quartiles. 

Companies are permitted to take a "snapshot" of their employee population on April 5th each year in order to establish the population used to comply with the disclosures.  The information must be listed on the company's website and be easily navigable from the home page.  The data will also be disclosed on a government website.  Criticisms of the rule include concerns over the quality of the information provided by the disclosure mirroring in almost exact form and tone the criticisms of the Dodd-Frank pay ratio requirements.  With the gender pay gap a focal point in state legislation and a hot topic for shareholder proposals in the United States, we will keep you apprised of the development and progression of the UK disclosures.