Finally, after several delays, the Government have published the revised version of the draft Regulations, with the aim of bringing the gender pay reporting requirements into force from 6 April 2017.
The revised Regulations were published on 6 December 2016, and contain some important revisions which have been made as a result of the consultation process. These answer some of the questions that employers had about how the Regulations are intended to work in practice.
The fact that the Regulations are due to take effect from 6 April 2017 means that the first obligation for employers to publish gender pay gap information will be on 4 April 2018. This is because the ‘snapshot date’, i.e. the date on which the employee numbers are assessed, is set by the revised Regulations as 5 April each year. It will only be those employers which have 250 or more employees on that date which will be required to publish their gender pay gap information, and the information from that ‘snapshot date’ will need to be published within 12 months, i.e. by 4 April 2018.
Not just employees
Although the terminology used in the Regulations is ‘employer’ and ‘employees’, the definition does actually include workers as well. However, in response to the consultation the Government received feedback from employers that it would not be reasonable to expect them to include pay information from workers where they are not on the employer’s payroll systems. An exception has therefore been made so that the reporting duty does not apply in relation to workers where the employer does not have, and it is not reasonably practicable for the employer to obtain, the relevant data.
Staff on leave excluded from calculations
In consultation, employers had also given feedback that employees absent on family-friendly leave should be excluded from the calculation (so that, for example, if an employer had a large number of staff on maternity leave (and therefore potentially maternity pay) at the ‘snapshot date’, it would not unfairly skew the figures). As a result of these concerns, the Regulations have been amended so that employers are now required to base their calculations only on ‘full-pay relevant employees’. These are employees who are not, during the relevant pay period, being paid at a reduced rate or nil as a result of being on leave, and ‘leave’ is stated to include annual leave, maternity, paternity, adoption or shared parental leave, sick leave and special leave. Staff who are absent do however still count towards the 250 threshold.
Staff with variable hours
Questions were asked in the consultation as to how employers should deal with zero hours or casual workers, as the calculation method set out in the previous Regulations involved weekly pay divided by weekly hours, which clearly would be difficult in relation to those employees who do not have regular working hours each week. Instead, the new Regulations require calculation to use normal working hours where applicable, or where there are no normal working hours a 12 week reference period will apply.
The Regulations clarify how the quartiles should work in relation to publishing the gender pay gap information. In order to work out the quartiles, employers should list employees in order of their pay, from lowest to highest, then divide the employees into four equal groups. The proportion of male or female employees in each quartile should be calculated by dividing the number of male or female employees in the quartile by the total number of employees in the quartile, and multiplying by 100.
In terms of bonus information, only the part of any bonus payment that is proportionate to the relevant pay period should be included in the calculation of an employee’s gross hourly pay for the purposes of determining the employer’s mean and median gender pay gap.
Some large corporate employers had suggested in consultation feedback that it should be possible for their statistics to be published on a group basis, rather than each individual company. However, this request was rejected and the requirement remains for each individual entity to publish its own gender pay information.
As we reported previously, one of the criticisms of the previous draft Regulations was the lack of an enforcement mechanism. The Explanatory Notes to the amended draft Regulations indicate that failure to comply with the Regulations will constitute an ‘unlawful act’ within the meaning of S.34 of the Equality Act 2006, which gives the Equality and Human Rights Commission (EHRC) the power to take enforcement action. Although the Regulations themselves have not specifically been amended on this point, the Government seems to have made its intention clear. It is not known at this stage what approach the EHRC will take to enforcement. We suspect that, as we have covered previously, the Government will be hoping that pressure on reputation will be one of the main incentives for employers to comply.
For employers whose gender pay information does show a significant gender pay gap, we recommend that they consider publishing an optional narrative explaining the factors which may lay behind the gender pay gap and what steps are being taken to deal with it. We are happy to advise on any narratives before they are published – do get in touch if we can be of assistance.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).
Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.