These FAQs look at the requirements of the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (the Regulations) and some of the common queries associated with the gender pay gap reporting obligations under the Regulations.
The first, and what is considered to be the final, version of the draft Regulations was published on 23 January 2017 and they are due to come into force on or before 31 March 2017 and aim to facilitate increased performance of the Public Sector Equality Duty (PSED).
The Regulations follow a public consultation last year, although the Government has not yet released its response. The Regulations largely mirror the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which apply to private sector employers.
Should you be interested in a detailed guidance note or tailored support for your college please do contact us. We can provide comprehensive support to assist your college in meeting its requirement to report gender pay gap information and understand and manage any risks.
Which organisations do the Regulations apply to?
The Regulations apply to all public sector employers listed in Schedule 2 of the Regulations that have 250 or more employees. This includes English FE colleges.
How do the Regulations differ from the regulations relating to private employers?
There are two key differences, firstly, the requirement to report forms part of the existing PSED. The Government proposes the repeal of the Equality Act 2010 (Specific Duties) Regulations 2011 and replace them with the Regulations. Schedule 1 of the Regulations sets out the requirements in relation to gender pay gap reporting.
Secondly, the 'snapshot' date that will be used to collate the relevant pay data will be 31 March, as opposed to 5 April for private sector employers.
What is the Public Sector Equality Duty?
Under the Regulations every FE college must demonstrate that it has complied with section 149(1) of the Equality Act 2010 which states that:
A public authority must, in the exercise of its functions, have due regard to the need to:
- Eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act
- Advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it
Foster good relations between persons who share a relevant protected characteristic and persons who do not share it.
In order to demonstrate compliance colleges must:
- Publish information to demonstrate compliance with the PSED, in particular information about employees who share a relevant protected characteristic by no later than 30 March 2018 and going forward annually (at intervals of no more than one year from the last publication)
- Prepare and publish one or more objectives relating to section 149(1) of the Equality Act 2010 by no later than 30 March 2018 and going forward at intervals of no more than four years.
N.B. the requirement to report information about employees sharing a relevant protected characteristic only applies to colleges with over 150 employees. In addition, where a college has already complied with the PSED set out in the 2011 regulations within the four year period ending on 30 March 2018, it will only be required to publish its objectives within four years from the last publication.
The requirement to report gender pay information now forms part of the requirements of the PSED.
What pay gap information needs to be reported on?
There are six reports that are required under the Regulations:
The difference in mean pay between genders (expressed as a %)
The difference in median pay between genders (expressed as a %)
The difference in mean bonus payments between genders (expressed as a %)
The difference in median bonus payments between genders (expressed as a %)
The proportion of men and women in the workforce that received a bonus
The number of men and women in each quartile of the pay range
We would recommend that colleges accompany the key reports with a narrative and also consider publishing further information if it would add helpful context.
What is a pay quartile?
Colleges will be required to rank employees in order of pay from lowest to highest, then divide the workforce into four equal groups based on hourly pay rate and show the proportion by gender in each group. This will show the gender profile across a college and critically will not be affected by a few high earners.
There is no requirement to publish to pay rates within each quartile, so this report will not disclose the pay of senior employees.
When is it necessary to produce the first report?
The first report will be based on pay data captured on 31 March 2017. The first report can be published at any time from 1 April 2017 to 30 March 2018.
It will then be necessary to publish reports annually thereafter:
- for the pay reference period March 2018 no later than 30 March 2019
- for the pay reference period March 2019 no later than 30 March 2020 etc
Do casual members of staff count as 'employees'?
The definition of employees is broad, so will include casual staff who undertake work on 31 March in each year, even if there is no ongoing contractual arrangement.
It will also include those who have umbrella agreements to undertake work as and when required, regardless of whether any work is undertaken on 31 March.
Where the inclusion or exclusion of casual staff is likely to prove critical as to whether your college has 250 or more employees, you may want to do a closer analysis of working arrangements prior to March 2017, in order to assess the options available.
Do self-employed staff count?
Individuals who are genuinely self-employed fall outside of the scope of the Regulations. However, the Regulations confirm that workers (i.e. individuals who are not strictly employees but who are engaged under a contract to personally perform services for the college) will count and should be included.
Colleges should be particularly cautious where they have categories of individuals who are treated as self-employed but from a legal perspective could arguably be categorised as employees or workers. This is likely to be most relevant where the exclusion of these individuals means that a college falls below the 250 threshold.
Contracted out staff who are provided through cleaning, catering or IT companies (or similar) should be excluded. They will be counted as employees of the organisation that is contracted with. Colleges should be aware of the potential impact of outsourcing and insourcing, for example, bringing catering or cleaning in-house, and may wish to consider the timing of any such projects.
Agency workers are also excluded.
How do you undertake the calculations which underpin the reports?
The reports on mean pay difference, median pay difference and the pay quartiles are all based on establishing the 'hourly rate of pay' for each relevant full pay employee.
What is the hourly rate of pay?
The hourly rate of pay is determined by following a six step process which is set out in the Regulations. In summary, it requires identifying the relevant pay (ordinary and bonus pay) paid during the pay period including 31 March. The Regulations specify which elements of an individual's pay should be taken into account and which should be excluded.
Once you have determined the pay in the relevant pay period it is necessary to divide this by the number of weekly working hours.
What happens if we operate a salary sacrifice arrangement?
In accordance with the Regulations the 'pay' figure should be taken after the deduction has been made for the salary sacrifice scheme.
This may create an artificially low hourly rate for colleges that operate salary sacrifice schemes and you may wish to explain this in the narrative and/or calculate the figures both pre and post salary sacrifice.
How do you calculate working hours?
The Regulations set out how to calculate working hours where the employee has normal working hours, no normal working hours and undertakes work on a piecework basis.
There will be specific considerations for different types of colleges that are caught be the Regulations. For example, the Regulations do not specifically deal with term-time only working arrangements.
Publication of Information
The regulations applicable to private sector organisations require the pay gap information to be accompanied by a written statement by a director or equivalent. However, there is no equivalent requirement in the Regulations, presumably because it falls within part of the PSED. However, the gender pay information must be published on the college's website, in an accessible manner for at least three years. It must also be published on a government specific website.
What should our FE college be doing to prepare for the Regulations?
We would recommend that in the first instance you ensure that you understand how your own pay data system works and satisfy yourself that it is accurate and can be relied upon.
It will be necessary to understand the information you will need to produce the six reports and consider the most effective way of capturing this.
It is worthwhile doing a trial run (perhaps with the benefit of legal privilege) to ascertain the gender pay gap and so you have advance warning of what the gender pay gap will be and what the reports will look like.
Analyse whether the reports create any legal, organisational or reputational risks, and consider a strategy to address these.
Take steps to ascertain the cause of any pay gap so that this can be explained in the narrative, or so you can consider the options to close the gap (if appropriate to do so).
For all colleges it is helpful to have a transparent and robust pay policy so that everyone within the college understands how pay decisions are made.