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S1-16 – Remuneration metrics (pay gap and total remuneration)

🗂️ ESRS S1 Own workforce, page 15

  1. The undertaking shall disclose the percentage gap in pay between its female and male employees and the ratio between the remuneration of its highest paid individual and the median remuneration for its employees.

  2. The objective of this Disclosure Requirement is twofold: to allow an understanding of the extent of any gap in the pay between women and men amongst the undertaking’s employees; and to provide insight into the level of remuneration inequality inside the undertaking and whether wide pay disparities exist.

  3. The disclosure required by paragraph 95 shall include:

(a) the gender pay gap, defined as the difference of average pay levels between female and male employees, expressed as percentage of the average pay level of male employees[1];

(b) the annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual)[2]; and

(c) where applicable, any contextual information necessary to understand the data and how the data has been compiled and other changes to the underlying data that are to be considered.

  1. The undertaking may disclose a breakdown of the gender pay gap as defined in paragraph 97(a) by employee category and/or by country/segment. The undertaking may also disclose the gender pay gap between employees by categories of employees broken down by ordinary basic salary and complementary or variable components.

  2. In relation to paragraph 97 (b), the undertaking may report this figure adjusted for purchasing power differences between countries, in which case it shall report the methodology used for the calculation.

Application Requirements

Section titled “Application Requirements”

Pay gap

AR 98. When compiling the information required under paragraph 97 (a) for the gap in pay between its female and male employees (also known as the “gender pay gap”) the undertaking shall use the following methodology:

(a) include all employees’ gross hourly pay level; and

(b) apply the following formula to calculate the gender pay gap:

(𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 pay level 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 − 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠

ℎ𝑜𝑢𝑟𝑙𝑦 pay level 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠)

__________________________________________________________ 𝑥 100

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 pay level 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

AR 99. When disclosing the information required under paragraph 97 (a), the undertaking shall provide any contextual information necessary to understand the data and how the data has been compiled (methodology). Information regarding how objective factors such as type of work and country of employment influence the gender pay gap may be reported.

AR 100.The measure of the undertaking’s gender pay gap shall be reported for the current reporting period and, if reported in previous sustainability reports, for the previous two reporting periods.

Total remuneration Ratio

AR 101.When compiling the information required by paragraph 97 (b), the undertaking shall:

(a) include all employees;

(b) consider, depending on the undertaking’s remuneration policies, all of the following:

i. base salary, which is the sum of guaranteed, short-term, and non-variable cash compensation;

ii. benefits in cash, which is the sum of the base salary and cash allowances, bonuses, commissions, cash profit-sharing, and other forms of variable cash payments;

iii. benefits in kind, such as cars, private health insurance, life insurance, wellness programs; and

iv. direct remuneration, which is the sum of benefits in cash, benefits in kind and total fair value of all annual long-term incentives (for example, stock option awards, restricted stock shares or units, performance stock shares or units, phantom stock shares, stock appreciation rights, and long-term cash awards). (c) apply the following formula for the annual total remuneration ratio:

𝐴𝑛𝑛𝑢𝑎𝑙 𝑡𝑜𝑡𝑎𝑙 remuneration 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑢𝑛𝑑𝑒𝑟𝑡𝑎𝑘𝑖𝑛𝑔′𝑠 ℎ𝑖𝑔ℎ𝑒𝑠𝑡 𝑝𝑎𝑖𝑑 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙

𝑀𝑒𝑑𝑖𝑎𝑛 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑡𝑜𝑡𝑎𝑙 remuneration (𝑒𝑥𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑡ℎ𝑒 ℎ𝑖𝑔ℎ𝑒𝑠𝑡 − 𝑝𝑎𝑖𝑑 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙)

AR 102.To illustrate the contextual information, the undertaking may provide an explanation to understand the data and how the data has been compiled (methodology). Quantitative data, such as the annual total remuneration ratio, may not be sufficient on its own to understand pay disparity and its drivers. For example, pay ratios can be influenced by the size of the undertaking (for example, revenue, number of employees), its sector, its employment strategy (for example, reliance on outsourced workers or part-time employees, a high degree of automation), or currency volatility.