On 6 April 2017, the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (Regulations) will to come into force (subject to parliamentary approval). The final version of the Regulations has been published alongside an explanatory memorandum. The first gender pay gap reports will be due by 4 April 2018 (with publication for three years on both the company's website and a central government website).
What do you (as a qualifying private employer with more than 250 employees) need to do now?
- Ensure you are clear which entities are qualifying entities for the purposes of the Regulations, and how many reports will need to be produced. If each entity employs fewer than 250 employees as at 5 April 2017, no reports will need to be published.
- Be ready to capture data on the snapshot date (now 5 April 2017 and not 30 April 2017).
- Check the guidance on how quartile pay bands are to be calculated. Remember that the four quartiles (lower, lower middle, upper middle and upper quartile pay bands) must each include an equal number of employees.
- Check that you know who must be included in the calculation. The most recent changes include clarification that employees on sick pay and maternity leave can be excluded from the hourly pay comparison. Partners and LLP members are now carved out. There is no longer a requirement that employees are ordinarily working in Great Britain (the wider definition of employment under section 83 of the Equality Act 2010 applies, being employment under a contract of employment, a contract of apprenticeship, or a contract personally to do work, crown employment, or employment as a relevant member of House of Commons or House of Lords staff). Ensure that you have identified any areas of uncertainty, for example, around casual workers and contractors.
- Check that you know which items need to go into the calculation (basic pay, paid leave, sick pay, area allowances, shift premiums and bonuses) and which are excluded (overtime pay, expenses, benefits in kind, value of salary sacrifice schemes).
- Know before finalising the data what it is expected to say. This will help your organisation plan. Where results indicate a significant gap, the organisation should consider if it wants to produce a narrative, or disclose more extensive data to offset this. If so, it will need time to agree appropriate content. Remember that employees may use any data disclosed for the purposes of an equal pay claim.
- Ensure that the data can be analysed and published on your website and the government website within 12 months (and remain publicly available for three years). Ensure that the overall figures are calculated giving the mean and median average hourly pay.
Bonus is a significant factor in this duty. The number of men and women receiving a bonus in the relevant 12-month period, as well as the gender bonus gap, is likely to be amongst the more controversial elements of the Regulations. While the latest information provides some extra explanation of what amounts to bonus pay, the position is far from clear. It remains likely that companies will interpret the requirements in different ways.
Where any interpretation or discretion is required in producing the annual statement, companies are advised to ensure that their approach remains consistent on a year-by-year basis (until further clarification). A significant change in the figures because of a different interpretation year on year is more likely to attract attention. Given that the enforcement of this duty is largely centred around public perception and self regulation, any negative jump should be avoided. It is expected that most entities will publish data showing a gap; what remains to be seen is how many of those organisations will make progress in closing that gap once other parties are aware of it.
The government's position remains that public authorities will be subject to separate but similar duties to report; further information will be published shortly. The snapshot date for public bodies is expected to be 31 March and not 5 April. Welsh and Scottish public authorities will be subject to separate duties under the devolved powers.