Gender pay gap regulations published

The final draft version of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has been published. Subject to Parliamentary approval, the regulations are to come into force on 6 April 2017, a few weeks earlier than originally anticipated. Since the draft regulations were published for consultation back in February 2016, a number of important changes have been made.

The regulations apply to “relevant employers”, which are private and voluntary sector employers who employ 250 or more relevant employees on 5 April each year, which is the relevant snapshot date to carry out the data analysis. The first snapshot date is 5 April 2017. A “relevant employee” is one who falls within the wider definition of employee under section 83 of the Equality Act 2010 and so includes workers who perform their services personally. The regulations expressly exclude partners and LLP members.

Employers will be required to publish:

  • the median and mean gender pay gap figures for pay
  • the median and mean gender pay gap figures for bonuses
  • the percentage proportion of men and women receiving a bonus
  • the number of men and women in each pay quartile.

In relation to calculating the gender pay gap figures for pay, the regulations only cover “full-pay relevant employees”, with the result that employers need to exclude from the pay gap figure (but not from the bonus pay gap figure) any employees who are receiving less than full pay during the pay period in which the snapshot date falls for any reason such as taking maternity, paternity or sick leave.

The gender pay gap figure for pay is based on the hourly rate of pay, which is made up of both ordinary pay and bonus pay. Ordinary pay is assessed by reference to the relevant pay period (weekly or monthly). For bonus pay, in the case of an annual bonus, only a pro rata amount is taken into account to calculate the hourly rate of pay. Ordinary pay includes basic pay, allowances, piecework pay, fully paid leave and shift premium pay, but it excludes pay in lieu of leave, overtime, redundancy pay, termination payments and remuneration provided otherwise than in money. The hourly rate of pay is based on an employee’s normal weekly working hours, but a 12-week reference period applies for employees whose working hours vary from week to week.
 
The gender pay gap figure for bonuses is based on a 12-month period ending on the snapshot date, but employees who are no longer employed on the snapshot date should be excluded. Bonus payments include any payments that relate to profit sharing, productivity, performance, incentive or commission and can be in the form of money, vouchers, securities, securities options or interests in securities.

The four pay quartiles involve dividing the workforce into four groups each containing an equal number of employees, starting from the lowest paid to the highest paid.

Publication of the final data must be on the employer’s website and it must be publicly available for three years. It must also be accompanied by a written statement of accuracy, signed by a director, partner or equivalent. The first set of data must be published by no later than 4 April 2018 (i.e. within one year of the snapshot date) and annually thereafter. Employers must also submit the data to the government who will publish it on a government website in league tables.

The regulations are silent on enforcement but the explanatory memorandum to the regulations states that a failure to comply will constitute an unlawful act and so the Equality and Human Rights Commission will be able to take enforcement action.

The government is also to publish non-statutory guidance to assist employers after Parliament has approved the regulations.

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