The wait is over... Revised draft gender pay gap regulations finally published
The ongoing issue of gender inequality in pay is one that has been highly publicised over recent years. Given that only 7 companies voluntarily published their pay data under the voluntary “Think, Act, Report” scheme, the Government published draft regulations to tackle this issue in February 2016 by compelling employers employing more than 250 employees to publish their gender pay gap information.
Following a consultation process, the concerns around the interpretation of the Regulations have taken a while to clarify, as it was only on 6 December 2016 that a revised version of the draft Equality Act 2010 (Gender Pay Gap Information) Regulations have been published.
Subject to Parliamentary approval, the Regulations are expected to come into force on 6th April 2017. Issues that have been clarified include:
- Defining “relevant employees” for whom data has to be produced. The wider definition now includes both workers and employees. To acknowledge the difficulties employers may face in gathering data for workers who are not in their normal payroll systems, there is an exception in relation to workers for whom you do not have, and it’s not reasonably practicable for you to obtain, the relevant data.
- How to calculate the quartile pay bands, which will contain the proportions of male and female employees in each band, ranked from lowest paid to highest paid.
- When calculating mean and median gender pay gaps and their pay quartiles, you need refer only to “full pay relevant employees”. This means you only take account of those employees who, during the relevant period, are not being paid at a reduced/nil rate as a result of being on leave. (“Leave” includes annual leave, maternity, paternity, adoption or shared parental leave, sick leave and special leave.) This approach will address the concern that since pay includes leave pay, an employer’s pay gap could seem artificially greater if, for example, it had a significant number of female employees absent on maternity leave and receiving statutory maternity pay at the snapshot date than if the calculation was based on their “normal” rate of pay.
- The calculation of the “gross hourly rate of pay” is now set out in detail to address the issue of casual workers who did not have weekly basic paid hours.
- Bonus pay and how bonus payments should be treated, to avoid employers distorting the figures in terms of when they are paid.
- In terms of sanctions for non compliance, it appears that there is now the risk of actual penalty, rather than just the “reputational risk”.
- Explanatory Notes to the amended Regulations indicate that failure to comply with the new rules will amount to an “unlawful act” … which empowers the Equality and Human Rights Commission to take enforcement action” so it could use it's powers to investigate employers who have failed to comply.
- Perhaps of most immediate importance, is that the “snapshot date” (to assess whether an employer meets the 250 employee threshold and by reference to which data must be gathered) is now 5th April each year, instead of 30th April. So, employers will be required to publish their first gender pay gap reports in respect of 2017 data by 4th April 2018.
What do you need to do? Consider the following:
- Will you be required to comply? Who are your relevant employees and will you have 250 or more?
- If you are part of a corporate group, consider which employing entities will be relevant employers so you can identify how many separate gender pay gap reports you will need to produce.
- Review your remuneration packages, all benefits, and any flexible benefits scheme, to analyse which elements will be reportable. Audit your bonus schemes and be clear as to what needs to be reported as “bonus pay”.
- Do a “dummy run” – calculate the gender pay gap information using the methodology of the draft Regulations to assess how big the gap is likely to be when the first report is published, and to identify any issues which may be harmful to your reputation when published. Consider your internal communications to staff, and how you will position your findings.
- Identify who will sign the written statement confirming the accuracy of the published information. Ensure they are familiar with the Regulations and their obligations.
You will shortly be able to access a copy of our Gender Pay Gap Guide and dates for our next series of Employment seminars taking place in March, which will also cover the Gender Pay Gap.