The new Regulations, which require employers with at least 250 employees to publish annual information on their gender pay gap, are expected to come into force on 6 April 2017. They have been amended following a consultation on its previous version.
The previous version published in February left some questions unanswered. Some of the issues on which further clarity has now been received are:
• The definition of employee: Regulation 1(2) now defines a 'relevant employee' (ie a person whose pay information needs to be included in the calculations) as someone who is employed by the employer on the 'snapshot date'. According to the Explanatory Note this includes workers, employees and apprentices. So information about all these 'relevant employees' must be included.
• The inclusion of bonuses: Regulation 6(1) clarifies that the calculation of pay should only include the portion of the bonus payment that is proportionate to the relevant pay period (the period within which the 'snapshot date' falls – i.e. 5 April each year). This addresses concerns raised that single bonus payments could distort the figures. Both the mean and the median bonus gap average calculations are to be included.
• Pay calculation: A detailed step-by-step process for calculating the 'hourly rate of pay' has been provided, which should help, for example, in dealing with concerns about how to include casual workers' hours in the calculations. The Regulations also clarify that the calculations are to be based on 'full-pay relevant employees', which excludes employees who during the relevant period are being paid at a reduced rate or nil as a result of being on leave (which includes annual, maternity and related types of leave).
• Presentation of salary quartiles: The Regulations also now include a step-by-step process for calculating and presenting the quartile pay bands.
• Enforcement: Although not included in the Regulations themselves, the accompanying draft Explanatory Memorandum states that failure to comply with the Regulations would be an 'unlawful act' for the purposes of Part 1 of the Equality Act 2006 and would fall within the existing enforcement powers of the Equality and Human Rights Commission.
If you require further information on anything covered in this briefing please contact Eleanor Rowswell([email protected]) or your usual contact at the firm on 020 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, January 2017
We summarised the draft Regulations in an article published last May. Please read that article for information on the background to, and main requirements of, the legislation.