Gender Pay Gap Reporting – Final Regulations
What are the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the “Regulations”)?
If you are an employer the key words on your lips for 2017 should be…gender pay gap. Earlier this year we reported on the Regulations which were implemented under section 78 of the Equality Act 2010 which came into force on 22 August 2016.
The Regulations will require private sector employers and voluntary organisations with more than 250 employees to publish information about the differences in pay between men and women. In particular, these employers and voluntary organisations will be required to:
- Analyse their gender pay gap in April 2017 and submit their findings within 12 months;
- Publish the data acquired on their searchable UK website so that it is accessible to employees and the public. The data must be retained for three years in order to demonstrate the progress made towards closing the gap;
- Produce a written statement confirming that the data provided is accurate; and
- Upload the data acquired to a Government sponsored website.
What changes have been made to the Regulations?
The first publication of the Regulations welcomed views on the positive and negative aspects of them. After some consideration of these views, the Government published the revised version of the Regulations on 6 December 2016. These are yet to be finalised as they are subject to parliamentary approval, but are unlikely to meet any opposition.
The final draft of the Regulations demonstrates that the Government has sought to address some of the concerns raised in relation to the first draft of the Regulations. In particular:
- The definition of “employee” has been amended. It was unclear in the original draft, but has been amended to include a broad definition taken from the Equality Act 2010. The definition now covers self employed, who are consultants, independent contracts etc. This is likely to mean that more employers will be captured by the Regulations, as this broadened definition means more types of workers will count towards the 250+ threshold.
- An exception in relation to pay data has now been included in the Regulations. This allows employers to exclude some “workers” (that is those who are employed personally to do work) from their reporting obligations in circumstances where it is not reasonably practicable to obtain pay information due to them not being on their normal pay roll system. As ever with the usage of the term “reasonably”, this is likely to give rise to argument as to what circumstances it is not reasonably practicable.
- The Regulations also exclude partners (including LLP members) from employer reporting duties. As such, pay or bonus data will not need to be provided.
- When calculating the mean and median gender pay gaps, employers should now only base their calculations on “full pay relevant employees” (employees who are not during the relevant pay period being paid a reduced rate as a result of being on annual leave. Leave includes annual leave, maternity, paternity, adoption, sick leave, special leave and shared parental leave).
- Respondents to the first draft regulations criticised for not segregating one off bonus payments from pay. If a bonus payment is to be paid on a one off basis which happened to fall within the snapshot date, the figure could be distorted significantly.
- The Regulations require employers to show the numbers of men and women who fall within each of the four stipulated pay quartiles. The Government has clarified what is meant by “quartile”; splitting staff into four equal sized groups that are organised according to the hourly pay rate, from the lowest to the highest paid.
- The snapshot date for determining whether employers meet the 250 employee threshold has been moved from 30 April to 5 April in each year. The snapshot date is the date from which employers have 12 months to publish the gender pay gap information they have gathered.
- In order to calculate the mean and median gender pay gap figures, the first draft of the Regulations simply referred to “gross hourly rate of pay”. This did not take into consideration casual workers who do not have weekly basic paid hours. The final draft Regulations have been amended so that employers must calculate each employees’ gross hourly pay using an employee’s normal working hours and adopting a 12 week reference period for employees whose working hours vary from week to week.
What does this mean for me as an employer?
If you are an employer who is likely to fall within the 250+ employee threshold, it would be advisable in the New Year to carry out a dry run gender pay report in advance of April 2017. This will help to identify any weaknesses within your proposed processes, enabling you to make tweaks in advance of collecting data.
If you would like assistance in preparing for the implementation of the Regulations or further details, please contact our employment team on 0345 070 6000.