The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 are due to come into force on 6 April 2017. You will recall that these Regulations will apply to large private and voluntary sector employers with over 250 employees. If your company falls within the definition, you will be required to analyse your gender pay gap each April, and publish the compulsory statistics within 12 months. The report will need to be published on your own website and uploaded to a government-sponsored website.
The text of the final Regulations have now been released and the Government have sought to clarify some of the concerns that were originally raised. The key clarification areas to note are as follows:
Who to include in your report?
- The definition of ‘relevant employee’ will include workers and employees (noted in s.83 of the Equality Act 2010).
- There is an exception from the reporting duty where employers do not have, or it is not reasonably practicable for the employer to obtain, the relevant data for workers (Regulation 2(3)).
- Employers are now only required to base their calculation on “full-pay relevant employees”. These are employees who are not, during the relevant pay period, being paid at a reduced rate or nil as a result of being on leave. ‘Leave’ means those on annual leave, maternity, paternity, adoption or shared parental leave, sick leave and special leave. (Regulation 1(2)).
Although it may feel like it will now include everyone, the exemptions will ensure that your gender pay gap is not distorted, where for instance you had a large number of female employees absent on statutory maternity pay at the snapshot date, and this was taken into account rather than their normal rate of pay.
How to calculate the report?
- The calculation for employees ‘gross hourly rate of pay’ is completed by using employee’s normal working hours, and adopting a 12 week reference period for those whose working hours vary from week to week (i.e. zero hours contracts) (Regulation 6 and 7).
- When calculating the ‘gross hourly rate of pay’ for an employer’s mean and median gender pay gap, any employee that has received a bonus payment (within the relevant period) should be portioned so that the bonus payment is proportionate to the relevant pay period.
- The definition of ‘bonus pay’ now reads that elements of bonus that are awarded as securities, securities options and interests in securities are to be treated as paid at the time when they would give rise to taxable earnings or taxable specific income (Regulation 4(3)).
- To determine the quartile pay bands, the appropriate approach is to put employees in order of their pay, from lowest to highest, then divide the employees into four equal groups (Regulation 13).
Finally the Government has taken action to ensure that an annual bonus, paid within the relevant pay period, is not included as a whole when calculating the mean and median pay gap. This annual figure could have distorted your figures dramatically.
When is the snapshot date?
- This has moved to 5 April each year. This is the date for determining whether you meet the 250 employees threshold and have to gather the gender pay information.
- The gender pay gap report must be published within 12 months of the ‘snapshot date’. (i.e. by 4 April 2018 for the first report) (Regulation 2 (2)).
All these changes are welcomed so that employers can be clear as to what is expected of them. The Explanatory Notes to the amended draft Regulations also suggests that failure to comply with this law will constitute an ‘unlawful act’. Though what this means and the suggestion itself is not contained in the Regulations.
If you require any clarification on whether this provision will affect your business or legal assistance with gathering the correct information, then please call me or a member of our employment team on 023 8048 2482.
Click here for the revised draft regulations.