The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 mean that all employers with more than 250 employees have a duty to publish details of their gender pay gap. This will come into force this Spring.
Who will be affected?
The gender pay gap reporting requirements will apply to all employers in the private and voluntary sectors with at least 250 employees. However, in a change to the draft regulations, the specific reference to UK employees has been omitted in the Regulations leading to speculation that employers who do not have 250 employees in the UK but do have 250 employees internationally could still be obliged to report on their gender pay gap.
Although smaller employers may not think these regulations apply to them, they may also need to consider whether they should review their gender pay gap in case they are asked for such information, for instance when tendering for work for larger organisations or the public sector.
Public sector employees are excluded from the Regulations, but there are now separate regulations in draft form which will introduce a virtually identical obligation to report the gender pay gap for public sector bodies.
Snapshot date
Although the Regulations are due to come into force on 6 April 2017, the new snapshot date for the purposes of measuring the gender pay gap is 5 April 2017 and annually thereafter.
The required information must be published within a year of the snapshot date of 5 April 2017 i.e. by 4 April 2018. The Regulations will require employers with more than 250 employees to take a ‘snapshot’ of your gender pay gap on 5 April 2017 and bonus pay details for the 12 months preceding 5 April 2017 i.e. from 6 April 2016 to 5 April 2017.
What information should be published?
You will need to publish results based on the following key calculations:
- The mean gender pay gap
- The median gender pay gap
- The mean gender bonus gap
- The median gender bonus gap
- The proportion of men and women who received bonuses
- Salary quartiles
Which employees are included?
The duty to report will apply to employees only. However, the explanatory notes to the Regulations confirm that the definition of employee is that contained in section 83 of the Equality Act 2010, which is a wider definition than the one found in the Employment Rights Act 1996 for unfair dismissal purposes. For gender pay reporting purposes, an employee includes anyone employed under a contract of employment, a contract of apprenticeship or a contract personally to do work. Workers will therefore be included, however partners and LLP members are specifically excluded.
Those who are employed “under a contract personally to do work” i.e. contractors are now excluded from the requirement to report on pay data if it is not reasonably practicable for employers to obtain the required data for them. This is intended to address the difficulties that employers face when obtaining the necessary data from those engaged on a casual or consultancy basis.
The Regulations include a new definition of “full-pay relevant employee”. This removes the requirement to include those in the salary quartiles and hourly pay comparison who, during the relevant pay period, are being paid at a reduced rate or nil as a result of the employee being on leave. This was a point made during the consultation about the potential effect of including employees on maternity or sick leave. However, as a result of the introduction of the “full-pay relevant employee” definition the Regulations now exclude these employees from the reporting duty entirely. It may have been preferable, and have provided more accurate data, to include them but to use their substantive salary (ie. that would apply if they were not on leave) for gender pay reporting purposes. Employees on leave are included in the calculation of the gender bonus gap.
The Regulations apply to each individual employee so there is no requirement to consider “full-time equivalents”. Each part-time or job share employee will count as one employee for gender pay reporting purposes. Once you have identified the total number of affected employees you will need to divide them into two groups of males and females.
Defining pay
Pay is to be calculated using gross figures, before any deductions for PAYE, national insurance contributions, pension contributions, student loan repayments and voluntary deductions (such as for a season ticket loan or gym membership). The value of salary sacrifice schemes is excluded from the definition of pay.
The definition of pay contained in the Regulations says that “ordinary pay” includes basic pay, allowances, piecework pay, leave pay and shift premium. Pay does not include payment referable to overtime, redundancy or termination of employment, payment in lieu of leave or remuneration provided otherwise than in money.
You will need to calculate a gross hourly rate for each individual employee. This is calculated using an employee’s normal working hours (where applicable) or by adopting a 12 week reference period for those whose working hours vary from week to week.
The public sector
The Government has published The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017, which extend the duty to publish annual pay gap reports to public sector employees with over 250 employees.
The main differences between the two sets of regulations are:-
- The public sector duty takes effect as part of the existing public-sector equality duty; and
- The ‘snapshot’ date will be 31 March for public sector employees as opposed to 5 April for private sector employees.
Where the information should be published?
You must publish your gender pay gap information within one year of the relevant snapshot date on your own website and must retain the information online for three years. The figures must be accompanied by a written statement of accuracy, signed by a director, partner or equivalent. The information must be presented in a manner that is accessible to all employees and the public. You are also required to submit this data for publication on a Government sponsored website.
For more details of how gender pay gap reporting will work or may affect your business in the future, please feel free to get in touch with me on 07880 207483 or email me at helen@byrnejoneshr.co.uk
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