Final Draft of Gender Pay Gap Regulations published

The final draft of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has been published and the Regulations are due to come into force on 6th April 2017 subject to Parliamentary approval. There have been a number of important changes made to the previous draft regulations which were published earlier this year as follows:-

1. Relevant Employers – This is a private or voluntary sector employer with 250 or more employees on the relevant date which is 5th April in the relevant year. This is based on employees of a particular entity rather than being group based. Public sector employers are now expressly outwith the scope but the Government plans to introduce similar reporting obligations for public sector employers shortly.

2. Relevant Employees – This has now been altered to “a person who is employed by the employer on the relevant snapshot date (5th April)”. It has now been clarified that the wider definition of employment applies and therefore will include workers and self-employed contractors who are under a contract personally to do work. Partners (including LLP members) are now expressly excluded. There is an exception in the reporting duty in relation to anyone in respect of whom the employer does not have the relevant data and it is not reasonably practicable for it to obtain that data eg. where the contractor is paid a fixed price and no records are made of hours worked. Employees are also now excluded from the pay reporting obligation if they receive less than full pay as a result of leave, eg employees on sick leave, maternity leave or shared parental leave.

3. Snapshot Date – This is the date on which employers must record pay data for reporting purposes and has been altered from 30th April to 5th April.

4. Ordinary Pay – This includes basic pay, allowances (but not out of pocket expenses) pay for piece work, pay for fully paid leave and shift premium pay.

5. Bonus Pay – This is now defined as any remuneration that is in the form of money, vouchers, securities, securities options or interests in securities and relates to profit sharing, productivity, performance, incentive or commission. It does not include overtime pay or remuneration referable to redundancy or termination of employment. The relevant period for bonus pay reporting is the 12 month period ending on the snapshot date ie. for the first gender pay gap report between 6th April 2016 and 5th April 2017 and will include all relevant employees ie. those on unpaid leave are included in this reporting requirement. Gender pay gap reporting is based on the hourly rate of pay which includes both ordinary pay and bonus pay paid during the relevant pay period. Where bonus pay is referable to a period longer than the relevant pay period eg. an annual bonus, then only a pro-rata amount is taken into account when calculating the hourly pay in the pay reference period.

6. Quartiles – This reporting requirement only applies to full pay relevant employees. It has been clarified that each of the 4 pay bands of quartiles must include an equal number of employees and they are to be reclassified as lower, lower middle, upper middle and upper quartile pay band. The proportion of female full pay relevant employee in each quartile pay band must be expressed as a percentage of the full pay relevant employees within that band.

What Must Be Published?

1. Median and mean gender pay gap figures for pay based on the hourly pay of full pay relevant employees during the relevant pay period. This will include a pro-rata proportion of any bonuses paid during the relevant pay period.

2. Median and mean gender pay gap figure for bonuses paid in the year ending with the snapshot date.

3. The percentage of men and women who receive a bonus.

4. The number of men and the number of women in each pay quartile expressed as a percentage of the total number of full pay relevant employees in each quartile. The information must be published on the employer’s website for at least 3 years in a way that is accessible to all employees and to the public and also on a central website which is to be set up by the Government for that purpose. The figures must be accompanied by a written statement of accuracy signed by a Director or equivalent.