On 6 December 2016, the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 were published – two months later than expected.
These require employers with 250 or more employees to publish prescribed information regarding their pay rates for male and female employees.
Gateley Plc’s Chris Davies explores what this means for companies:
Although the Regulations are overdue, it is still intended that they will come into force next April in accordance with the initial timetable.
However, there have been several important changes to the original Regulations published for consultation in February.
‘Employees’ in the wider sense
As expected, it has been clarified that the reporting requirement will extend to employees and the wider category of ‘worker’, who would be protected against discrimination in the workplace under the provisions of the Equality Act 2010 if they are employed ‘on the relevant snapshot date’. However, there is a specific provision that excludes partners or members of LLPs.
The difficulty of producing the required data for all casual workers has been recognised in the Regulations, as the reporting requirement will not apply where the employer does not have and cannot reasonably/practically obtain the relevant data. Where it is possible, the gross hourly pay should be calculated using normal working hours or by reference to a 12-week average where hours vary from week to week.
Interestingly, the revised regulations have dropped the requirement that the employee must be ‘a person who ordinarily works in Great Britain and whose contract of employment is governed by UK legislation’.
Whether this has been intentionally omitted, so as to bring within scope workers based overseas, is not clear. It does mean that employers with less than 250 employees in this country, who had thought they were not affected by the regulations, may have to reconsider if they have sufficient numbers abroad.
This is the date for determining whether employers meet the 250 employee threshold and is the annual reference point for publishing the information. This has been moved from 30 April to 5 April each year. Therefore, the last date for publication of the first gender pay gap reports in respect of 2017 is 4 April 2018.
Normal full pay
Another significant change is that calculations are to be based only on ‘full-pay relevant employees’. Employees being paid at a reduced rate or nil as a result of being on leave – including annual leave, maternity, paternity, adoption or shared parental leave, sick leave and special leave – will not be included.
Concerns that bonus pay could distort the calculation of the pay gap figures have also been addressed by providing that only payments proportionate to the relevant pay period should be included in the calculation of an employee’s gross hourly pay.
The requirement to separately publish the bonus pay difference will still apply.
Confirmation of how to calculate the quartile pay bands has also been given. Employees are to be placed in order of their pay, from lowest to highest and then divided into four equal groups. The proportion of male or female employees in each quartile will then be shown in the published figures.
In relation to enforcement there are no specific penalties set out in the regulations. However, failing to comply with the regulations will constitute an ‘unlawful act’ which will mean that the Equality and Human Rights Commission could take enforcement action against the employer.
More detailed Government guidance has yet to be published, but it is expected to be available once the regulations have been formally approved by Parliament.
It is also expected that identical regulations will be published that will extend the duties to public sector employers with 250 or more employees.
For more information, please contact:
Chris Davies, Associate
T: 0161 836 7936