Two weeks from today, 5 April 2017, marks the ‘snapshot’ date for which employers who are in scope need to collect the raw data on which to calculate their mean and median gender pay and bonus gaps. Employers will be required to publish information on their gender pay gap by 4 April 2018.

The requirement to assess pay data is the gross hourly rate of pay in the pay period which covers 5 April. Pay is calculated using gross figures, before any deductions for PAYE, National Insurance contributions, pension contributions, student loan repayments and voluntary deductions and takes into account both ordinary pay and bonus pay.

Ordinary pay means basic pay, allowances, pay for piecework, pay for leave; and shift premium pay. It does not include overtime pay, redundancy pay, pay in lieu of leave, or non-monetary remuneration.

Bonus pay means as any remuneration that is in the form of money, vouchers, securities, securities options or interests in securities and that relates to profit sharing, productivity, performance, incentive or commission.

These definitions give rise to some grey areas. The draft guidance published by Acas and the Government Equalities Office makes clear that the value of benefits provided under a salary-sacrifice arrangement do not count as ordinary pay; the employer should use the employee’s gross pay after any reduction for a salary-sacrifice scheme.

The position in relation to pension contributions is still not entirely clear. The guidance says “The amount of an employee’s ordinary pay and bonus pay must be calculated before deductions are made at ‘source’. Employee pension contributions are a deduction, so whether or not an employee makes pension contributions will not affect the gender pay gap calculations” but it is arguable that employer contributions are not a deduction. A salary supplement that an employee receives because they have opted out of a pension scheme would be included in pay.

Benefits in kind are excluded from the definition of ordinary pay. This means that an employer should disregard the value of, for example, a company car provided to an employee. However, car allowances should be included in the calculation, as allowances are included in the definition of ordinary pay. Where an employer provides an interest-free loan to employees, such as a season ticket loan, the value of the loan should not be included as pay.

Should retrospective pay rises be included in the calculation? The regulations allow employers to ignore “any amount that would normally fall to be paid in a different pay period” but this does not cover pay which should have been paid in the relevant pay period but was not.

Overtime is another grey area. Remuneration referable to overtime is excluded from the definitions of both ordinary pay and bonus pay. This suggests that employers should exclude not only actual overtime pay but also other elements of pay (such as allowances and shift premiums) earned in respect of overtime hours. If so, employers would need to distinguish between what is earned during normal working hours and what is earned during overtime hours. However, such a distinction could be difficult to draw in respect of some elements of pay. For example, how should an employer determine which part of a performance bonus or sales commission relates to work done during overtime hours?

These grey areas are bound to lead to inconsistencies in how employers in the same sector approach their data. Ultimately this risks making comparisons between employers of limited value. The most important consideration for employers may be to ensure that they take a consistent approach internally so they can track their own progress on the gender pay gap year-on-year.