Gender pay gap reporting
Wednesday 14th December 2016
The final version of the Equality Act 2010 (Gender Pay Gap Reporting Information) Regulations 2017 has now been published. They are expected to come into force on 6 April 2017.
The Regulations require all private sector employers with 250 or more employees to report on the difference in pay (including bonus) between men and women within their organisations.
Key areas of clarification include:
Quartile pay bands: the Regulations make clear that each quartile is to contain the same number of employees and now set out the steps and calculations required.
Relevant employee: A relevant employee is “a person who is employed by the employer on the relevant snapshot date”. Employment includes not only those working under a contract of employment but also many self-employed workers contracted directly to provide services. Partners, including LLP members, are specifically excluded from the Regulations.
Exception to pay data in respect of workers: recognising the difficulties employers may face when trying to collect data for those who are not part of their employee payroll systems, an exception has been introduced where an employer does not have the necessary data and it is not “reasonably practicable” for the employer to obtain it.
Employers are now only required to include “full-pay” relevant employees, meaning those who are being paid at a reduced rate as a result of being on leave (to include annual leave, maternity, paternity, adoption, shared parental leave, sick leave and special leave).
Calculating “gross hourly rate of pay”: The Regulations now set out a methodology for calculating gross hourly pay using an employee’s normal working hours where applicable and adopting a 12 week reference period for employees whose working hours vary from week to week.
Bonus: only an element of bonus payments proportionate to the relevant pay period are to be included in the calculation of an employer’s mean and median gender pay gap, not the whole bonus payment as was previously the case. This change reflects concerns that including the entire amount could distort the calculation.
The “snapshot date” is now 5 April each year. Employers are required to publish the gender pay gap information within 12 months of the snapshot date. Therefore, employers will be required to publish their first gender pay gap reports in respect of the 2017 data by 4 April 2018.
All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.