Regulations requiring larger private sector employers to publish their gender pay gap figures came into force on 6 April 2017.

Similar requirements for the public sector came into force on 31 March. In addition ACAS and the Government Equalities Office have now published their final joint guidance on the new law.

Background

The joint ACAS and Government Equalities Office non-statutory guidance, 'Managing Gender Pay Reporting' was published in January 2018 in draft form. A number of changes have been made to the new final form (the 'Guidance') which clarifies some previous ambiguities.

Broader coverage

The Guidance is now clearly intended to cover private, voluntary and public sector organisations. The previous guidance referred to a 'snapshot date' of 5 April for all employers, however this date has been amended in the Guidance to 31 March for public authorities subject to the Specific Duties Regulations and 5 April for all other employers. For public bodies, the publication date for which gender pay information should be published has changed from being by 4 April of the calendar year following the snapshot date to by 30 March of that calendar year.

Group structures

The Guidance now covers the position regarding groups of employers. Each separate legal entity with at least 250 employees within a group structure must calculate and publish separate gender pay reports.

Meaning of 'employees'

If an employer has a headcount of 250 or more employees on the snapshot date, it must comply with the gender pay reporting regulations. The Guidance explains who are 'employees' and who therefore should be included for reporting purposes. The explanation of whether 'partners' should be included has been expanded to explain that if partners would usually considered to be employees, they should be used to establish the employee headcount but should not be used as part of the calculations.

Foreign employees

The Guidance says that overseas employees should be included in the reporting, if they can bring a claim to an employment tribunal under the Equality Act 2010 and goes on to explain that if currency needs to be converted to carry out the relevant calculations, the exchange rate that applied at the date of payment should be used.

Data protection

The Guidance now includes a reminder to employers to bear in mind data protection principles when reporting on gender pay, because it may involve processing personal data.

Meaning of 'ordinary pay'

The following clarifications have been made in the Guidance to what should be included when calculating 'ordinary pay':

  • amounts for being on call should be included;
  • 'one off' payments for recruitment or retention should be treated as falling within bonus pay, not ordinary pay;
  • if a pay award is received in the relevant pay period but is backdated to a different pay period, only the amount that is attributable to the relevant pay period when the payment is received should be included and the back pay if it falls in a prior period will be discounted;
  • if an employee contributes to a pension by means of a salary sacrifice scheme, their gross salary after the reduction should be used.

The Guidance says that employees who receive no pay at all during the relevant pay period should be excluded from the pay gap calculations.

Meaning of 'bonus'

The following clarifications have been made in the Guidance to what should be included when calculating a bonus:

  • long service awards with a monetary value should be included;
  • non-monetary awards (e.g. extra annual leave) are benefits in kind and should be excluded;
  • while overtime pay should not be included in bonus pay, in cases where it is unclear whether an element of bonus pay relates to overtime, it should be included in bonus pay.

Conclusion

While it is helpful, the Guidance is simply an interpretation of the law, and its recommendations are not mandatory. Ultimately, only Courts and tribunals can interpret the law definitively. However, given that there is currently no enforcement mechanism in the gender pay regulations themselves, any remaining points of ambiguity are unlikely to be resolved. Where there are uncertainties, organisations should do their best to observe the letter of the law and, consider explaining their position in any narrative they produce to accompany their gender pay reports.