Final version of gender pay gap regulations published

The final version of the regulations which require private and voluntary sector organisations with 250 or more employees to report on their gender pay gap have been published – the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.

They reflect changes made in light of the consultation where various concerns were voiced. In summary, the changes made are as follows:

  • The snapshot date for working out if employers meet the 250-employee threshold has moved from 30 April to 5 April each year. Employers must publish the gender pay gap information within 12 months of the ‘snapshot’ date which means that employers will be required to publish their first gender pay gap reports in respect of the 2017 statistics by 4 April 2018.
  • Concerns about the definition of who an ‘employee’ was for the purposes of these regulations is covered in the Explanatory Notes which confirm specifically that ‘employment’ is as defined in s. 83 of the Equality Act 2010, which includes both ‘workers’ and ‘employees’. Although this was assumed, it was not specifically spelt out in the earlier draft off the regulations.
  • There is an exception from the reporting duty in relation to workers in respect of whom the employer does not have, and it is not reasonably practicable for the employer to obtain, the relevant data. This seems to recognise the difficulties some employers may face in gathering relevant data for workers who might be providing a personal service. 
  • The government has addressed the concern that an employer’s gender pay gap could appear to be greater if it had a significant number of, for example, female employees absent on maternity leave and receiving statutory maternity pay as at the snapshot date than if the calculation were based on the employees’ normal rate of pay. It has confirmed that when calculating their mean and median gender pay gaps and their pay quartiles, employers are now required to base their calculations only on ‘full-pay relevant employees’. This excludes employees who are being paid at a reduced rate or nil as a result of being on annual leave, maternity, paternity, adoption or shared parental leave, sick leave and special leave. 
  • Another concern was that the definition of gross hourly rate of pay which is ‘the weekly pay divided by weekly basic paid hours for each employee’ would be difficult in respect of casual workers. Regulations 6 and 7 of the final regulations set out a detailed method to be used by employers to calculate employees’ gross hourly pay, using an employee’s normal working hours where applicable, and using a 12-week reference period for employees whose working hours vary from week to week.
  • To take account of concerns raised about bonuses distorting pay gap figures if they are paid within the relevant pay period, the regulation 6 says that only a portion of the bonus payment that is proportionate to the relevant pay period should be included in the calculation of an employee’s gross hourly pay for the purposes of determining the employer’s mean and median gender pay gap.
  • The definition of ‘bonus pay’ has been amended to make it clear that if any elements of bonus include securities, securities options and interests in securities then they are to be treated as paid for the purpose of gender pay gap reporting at the point in time when they would give rise to taxable earnings or taxable specific income under s. 10 of the Income Tax (Earnings and Pensions) Act 2003.
  • The regulations confirm that in order to calculate the quartile pay bands, employers must put employees in order of their pay, from lowest to highest, then divide the employees into four equal groups. The proportion of male or female employees in each quartile will be calculated by dividing the number of male or female employees in the quartile by the total number of employees in the quartile, and multiplying by 100.
  • The Explanatory Notes now appear to have given the gender pay gap reporting regime some 'teeth' by making it clear that failure to comply with the regulations will constitute an ‘unlawful act’ within the meaning of s. 34 of the Equality Act 2006, and this then empowers the Equality and Human Rights Commission to take enforcement action. However, there is nothing specifically referred to in the regulations themselves.

 

The finalised version of the regulations can be accessed here: http://www.legislation.gov.uk/uksi/2017/172/contents/made#

The Government Equalities Office and ACAS have published a suite of guidance materials to help employers:

  • Guide - Managing Gender Pay Reporting in the Private and Voluntary Sectors
  • Factsheets – Gender Pay Reporting: Obligations for Employers and The Top Ten Myths about Gender Pay Reporting
  • Template – Gender Pay Reporting Notification Template

 

All the above can be accessed via the ACAS website at: http://www.acas.org.uk/index.aspx?articleid=5768