FRC comments on government consultation on mandatory gender pay gap reporting regulations

  • FRC comment letter Image

22 Mar, 2016

The Financial Reporting Council (FRC) has published its response to the Government Equalities Office (GEO) consultation on draft regulations that will introduce mandatory gender pay gap reporting for private and voluntary sector employers in England, Scotland and Wales with at least 250 employees.

The consultation was published in February 2016 and ran until 11 March 2016.

The FRC believes that the draft regulations should give further explanation to the term ‘relevant employer’ in the context of companies as, currently drafted, “there is a risk that the reporting requirements could apply to all companies (legal entities) with more than 250 employees”.  The FRC recommends that, for groups, disclosures should be provided at a consolidated level.

Further comments are provided in relation to the definition of pay which the FRC believes “does not sufficiently take into account different pay structures” and does not consider total remuneration.  It further comments that “it is difficult to make comparison between pay gap figures between male and female employees and with other organisations without considering the total remuneration package”. 

A number of comments are provided in relation to the calculation of the gender pay gap including the view that calculating the median will not provide relevant information and that companies should be provided with the flexibility to determine the appropriate reporting period.

Additionally the FRC comments that it is important for the GEO “perhaps through guidance” to encourage companies to include narrative information to explain the published figures.  It also supports disclosure on a company website.

The full comment letter is available on the FRC website.

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