Gender Pay Gap Reporting Obligations in Force from April

The Government has published revised draft regulations which will require larger private and voluntary sector employers in England, Wales and Scotland to report on their gender pay gap. 

Subject to Parliamentary approval, the Regulations will come into force on 6 April 2017 and employers will have to publish their first report no later than 4 April 2018.

Employers employing 250 or more employees will have to publish details of:

• the difference in mean and median hourly pay between men and women
• the difference in mean and median bonus pay between men and women
• the proportion of male and female employees that received a bonus
• the proportion of men and women in each pay quartile.

Employers will have to publish the information, and a written statement confirming its accuracy, on their UK website, make it available for three years and upload copies on to a Government sponsored website. 

The draft regulations address a number of concerns identified in the previous version published for consultation back in February 2016.

What has been changed/clarified?

• The snapshot date has changed from 30 April to 5 April. This is the date used for assessing whether the employer meets the 250 employee threshold. It is also the date used for capturing pay data. So employers must use the pay data for the payroll period (for example, a week or a month) which includes 5 April.
• The Government has clarified that when working out whether an employer employs 250 or more employees, it is not just employees employed under a contract of employment that count. It includes those employed under a contract of apprenticeship and anyone whose contract requires them to carry out work personally. It therefore includes workers, LLP members and self-employed contractors (unless they are to subcontract any part of their work or employ staff to provide the service). Each employer is assessed separately so there is no need to aggregate employees across a group of companies. However, employers will not have to report on the pay of partners and LLP members.
• When calculating the difference in mean and median rates of pay, employees who are not receiving full pay, for example because they are on maternity, other parental leave or sick leave must be excluded. This addresses the concern that pay gap figures will be skewed if an employer has a lot of female employees on maternity leave on the snapshot date.
• Where an employee is paid a bonus in the payroll period that includes 5 April, employers should only include a portion of the bonus which is proportionate to the payroll period. So for a monthly paid employee who receives an annual bonus in their April pay packet, the employer should only include 1/12 of the bonus. This means that the payment of bonuses will not distort the figures for the mean and median pay gap. The regulations also make it clear that bonuses awarded as securities, securities options and interests in securities are treated as paid at the point in time when they would be treated as paid for tax purposes. 
• Employers will have to report on median bonus pay, as well as mean bonus pay. 
• Reporting is based on an employee’s gross hourly rate of pay. The original draft regulations did not address the position of workers whose hours vary from week to week. The new regulations provide that in such cases, the employer must average out the pay over a 12 week reference period. 
• The regulations also clarify how employers should calculate quartile pay bands for the purposes of reporting on the proportion of men and women in quartile pay bands. Employers will have to put their employees in order of their pay, from lowest to highest, and then divide the employees into four equal groups to give the lower, lower middle, upper middle and upper quartile pay bands. 
• When compiling information relating to pay, employers will not have to include data relating to employees employed under a contract personally to do work if they do not have the data, and it is not reasonably practicable for them to obtain it. This addresses the concern that employers may face difficulty in gathering data for workers who are not on their normal payroll systems. 
• The regulations no longer expressly limit pay reporting obligations to employees who ordinarily work in Great Britain and whose contract of employment is governed by UK legislation. However, it is likely that employers will have to report on the pay of employees working overseas if the employment relationship has a sufficiently close connection with Great Britain.
• The Explanatory Notes indicate that a failure to comply with the Regulations will constitute an unlawful act under the Equality Act 2010, which enables the Equality and Human Rights Commission to investigate and take enforcement action. 

Supporting non-statutory guidance to help employers meet the regulatory requirements will be published after Parliament has approved the Regulations.  

If you would like assistance with any aspect of gender pay gap reporting please get in touch with your usual Doyle Clayton contact or email info@doyleclayton.co.uk.