Schools required to report on gender pay gap

Draft regulations bring relief to maintained schools with less than 250 employees.

We reported in October 2016 on the new requirement for private and voluntary sector employers to report annually their gender pay gap statistics. The Government announced at that time its intention that the public sector would also be required to publish gender pay gap statistics.  The draft Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (the Draft Regulations), governing requirements for public sector employers are now expected to come into force on 31 March 2017. 

Who must report gender pay gap statistics?
The Draft Regulations will apply to the governing bodies of schools maintained by a local authority and the proprietors of academies in England, along with other public authorities.  Schools and academy trusts which have 250 or more employees on the "snapshot date" (see below) will have a duty to report gender pay gap statistics. "Employees" are those working under a contract of employment, a contract of apprenticeship or a contract personally to do work.

This definition is fairly broad and will include employees, workers and some contractors but will not usually include staff supplied by an agency. The number (250) is on a headcount basis, and not by reference to full time posts. The recent worker status cases involving Uber taxi drivers and Deliveroo cycle delivery services highlight that employment status remains a difficult area for employers.

Under the Draft Regulations, the requirement to report falls on the governing body of a local authority maintained school. An employee of a local authority working in a maintained school is treated, for the purposes of the Draft Regulations, as an employee of the governing body of that school. In other words, each maintained school with 250 employees or more will have its own duty to report on gender pay gap statistics while the local authority will not count these employees in its total and will not include pay information for those employees in the local authority's gender pay gap report. Maintained schools with less than 250 employees will not therefore be included.

Multi-academy trusts, as the proprietors of academies, must calculate the number of their employees across the trust when assessing whether they have 250 or more employees.

When will reports have to be made?
If the Draft Regulations come into force when expected, the first "snapshot date" will be 31 March 2017 and the first reports will be due by 30 March 2018.

An analysis of gender pay gap figures will then have to be carried out on the snapshot date every March and an annual report published within twelve months of that date (i.e. on or before the following 30 March).

What must be reported?
The requirements for schools are very similar to those for private and voluntary sector employers. Where schools and academy trusts are caught by the rules, they must report:

1. Average women's hourly earnings as a percentage of average men's hourly earnings (based on both the mean and median average);
2. Average bonuses for women as a percentage of average bonuses for men (based on the mean and median average);
3. The percentage of women who receive bonuses and the percentage of men who receive bonuses; and
4. The number of male and female employees in each quartile of the employer's pay distribution (based on rates of hourly pay).

The "mean" is the average of the numbers (calculated by adding up all the numbers and dividing by how many numbers there are). The "median" is the middle number in a list of numbers ranked from low to high (calculated by placing all the numbers you are given in value order and finding the middle number (or middle two where there are an even number of employees)). Median averages avoid the skewing effect which can be created by a few very low or very high figures.

What is included in "pay"?
The new rules split pay into "ordinary pay" and "bonus pay". Ordinary pay includes basic pay, allowances, leave pay (e.g. holiday, maternity and sick pay, but only where an employee is receiving full pay and employees' pension contributions. "Ordinary pay" does not include overtime, redundancy or other termination payments, employers' pension contributions, pay in lieu of leave, expenses, benefits in kind or benefits relating to a salary sacrifice scheme.

In a change to the earlier draft of the regulations, employees are excluded from the pay reporting obligation if they receive less than full pay as a result of any period of absence. This means that employers should not include in pay calculations any employees who are, for example, on reduced pay or no pay because of maternity leave or sick leave at any time during the pay period in which the snapshot date falls.

"Bonus pay" includes anything not in "ordinary pay" such as payments in the form of money, vouchers and shares related to profit sharing, productivity, performance, incentive or commission, paid in the 12 month period ending with the snapshot date. Performance-related pay rises will increase ordinary pay and should not be counted as bonus pay. Employees who are on reduced pay because of leave from work in the period during which the snapshot date falls should still be included in the bonus pay figures.

Where will the statistics be published?
Employers must upload the report to a Government website and publish the statistics on their website. The information should be accessible to both employees and members of the public and must remain on the website for at least three years. Employers can, if they wish, include annotations and narrative to give a context for the figures.

Differences between the private sector and public sector regimes
There are a small number of differences between the public and private sector regimes. The main difference is in the key dates for gender pay gap analysis and reporting in each sector as follows:

 
Schools and academy trusts, unlike employers in the private sector, will not be required to make a supporting statement to accompany the gender pay gap report.  However, it is recommended that public sector employers publish a narrative to accompany the report.

ACAS guidance
ACAS has recently published new draft guidance (available here) to assist employers in making their gender pay gap report.  The guidance includes five steps for employers:

1. Compile the required information, including the staff who should be counted, their ordinary pay and bonus pay in the snap-shot date pay period and their working hours.
2. Perform the required calculations including pay and bonus gap figures, the proportion of men and women receiving bonuses and the proportion of men and women in each salary quartile.
3. Consider providing a supporting narrative to accompany the gender pay gap figures.
4. Publish gender pay information on the employer's website and on the Government website. 
5. ACAS recommends that employers implement plans to manage any gender pay gap issues within the organisation, for example by considering the management of family friendly leave and flexible working arrangements in order to encourage the participation of women at all levels of the organisation.

Comment
The publication of gender pay gap figures may create both external and internal pressures for school employers. Anecdotally, education is a sector in which women are more strongly represented at management level than other sectors. However, it is likely that the gender pay gap figures will reveal discrepancies which may be difficult for school employers to explain.  As well as the possible reputational risks, schools are advised to consider the risks of equal pay claims and internal grievances arising from the transparency which publication of these figures will bring.

Multi-academy trusts must additionally consider pay differentials which they may have inherited when staff transferred from previously maintained schools in different local authority areas.