Devonshires previously reported on the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (“the Regulations”) and following consultation the government has now published the final draft Regulations.
Subject to approval by Parliament, the Regulations are expected to come into force on 6 April 2017 and will affect all employers in the private sector and voluntary sector with 250 or more employees. Public Sector employers are expressly excluded, although the government intends to introduce similar regulations for them.
The key provisions and changes from the original draft Regulations are as follows:
- The definition of “relevant employee” for the purpose of the Regulations is the broader definition used under the Equality Act 2010 and as such any individual who is employed under a contract of employment, contract of apprenticeship or a contract personally to do work will need to be included i.e. this includes workers and self-employed contractors;
- Partners and LLP members are expressly excluded;
- New “snapshot date” of 5 April 2017 and first reporting deadline of 4 April 2018.
- Employers will need to split employees into four equal sized groups (“quartiles”) from lowest paid to highest paid (by hourly rate);
- Those who are being paid a reduced rate do not have to be included in the calculation such as those on family leave, sick leave or a sabbatical;
- Each company in a group (if it has 250 or more employees) must produce a separate report;
- The publication must be accompanied by a written statement which confirms that the information is accurate (signed by a senior employee or officer); and
- Bonus pay for employees will form pay for the normal report and also needs to be reported on separately.
Employers affected by the Regulations will have to report the following information:
- Difference in mean pay between male and female employees;
- Difference in median pay between male and female employees;
- Difference in mean bonus pay over the preceding 12 months between male and female employees;
- Proportion of male and female employees who received bonus pay during the preceding 12 months; and
- Number of male and female employees in each quartile.
Employers will be required to publish the information on their own website and the information must remain available for 3 years from the date of it being published. The information must also be submitted to a government website through which compliance will be monitored.
How pay is calculated
The Regulations set out a six step process for calculating the hourly rate of pay.
Pay includes: basic pay, fully paid leave, area allowances, shift premium pay, bonus pay and other pay such as car allowances and on call and standby allowances.
Pay does not include: overtime pay, expenses, any redundancy or termination payments, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay or tax credits.
As you can see there is a lot of information to assimilate and calculate and therefore it is advisable to begin the process now in anticipation of the commencement date. We would advise that you undertake a mock audit to identify any issues that you may have early on in order to be fully prepared.
The Regulations only require employers to publish the figures themselves. Nonetheless the government ‘strongly encourages’ employers to publish an accompanying narrative to contextualise the information, which will also give an opportunity to explain why a pay gap exists, if applicable.
If you require advice on the methodology used to calculate the required information to ensure compliance with the Regulations, our Employment team can provide advice on this. For more information please contact a member of the Devonshires Employment Team.