The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

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The revised draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (Regulations), which are due to come into force on 6 April 2017, were published by the government yesterday. In the main, the draft regulations published in February remain unchanged (see http://bit.ly/2h5uIWR for our note on this). However, the key differences are as follows:

  1. The Regulations will apply to employers with 250 or more employees on the snapshot date. “Employees” remains undefined but the explanatory note says that the definition under section 83 of the Equality Act 2010 will apply, thereby capturing those employed by the employer on a contract of employment, a contract of apprenticeship and a contract personally to do work. This definition is very wide and could include contractors. However, a new provision has been introduced stating that an employer is not required to include data relating to an employee if it does not have the data and it is not reasonably practicable to obtain it.
  1. The data snapshot date has moved from 30 April 2017 to 5 April 2017. The obligation is to report within a year of the snapshot date.
  1. The definition of “ordinary pay” has changed slightly. It includes basic pay, allowances, pay for piecework, pay for holiday, maternity, paternity, adoption, parental and shared parental leave, sick leave, special leave and shift premium pay. It does not include overtime pay, redundancy pay, termination payments, pay in lieu of leave or benefits in kind. Further, employees not on full pay due to the leave set out above are excluded for the mean, median and quartile information.
  1. Under the Regulations “bonus pay” includes money, vouchers, securities, securities options or interests in securities, profit sharing, productivity, performance, incentive or commission pay. It does not include ordinary pay (as defined above) or overtime pay, redundancy pay or termination payments. Securities are treated as being paid to the employee at the time it gives rise to taxable earnings.
  1. The Regulations set out in detail the steps to calculate the hourly rate of relevant employees. The steps are as follows:

Step 1 – Identify the ordinary pay and bonus pay paid to the employee in the relevant pay period which includes 5 April. This will usually be when employees are paid e.g. weekly, fortnightly or monthly.

Step 2 – Exclude any ordinary pay which would normally be paid in a different pay period.

Step 3 – If there is any bonus pay but bonuses are calculated over a different period (e.g. annual), pro-rata them in respect of the pay period.

Step 4 – Add together the ordinary pay and bonus pay after making the adjustments above.

Step 5 – Multiply the amount by 7 divided by the number of days in the relevant pay period.

Step 6 – Divide the amount by the number of working hours in a week for that employee.

  1. There is a new provision that establishes that working hours means normal working hours or, where an employee’s hours of work differ from week to week, the average over a 12 week period.
  1. The Regulations now set out the method of calculation for the quartile pay bands. Once the hourly rate of pay for a “full-pay” relevant employee has been calculated, rank them from the lowest paid to the highest paid. A “full-pay” relevant employee essentially excludes any employees not on full pay due being on leave listed at point 3 above. The list should then be divided into 4 sections each comprising, so far as possible, an equal number of employees. The proportion of male and female employees in each quartile must be expressed as a percentage. Where employees receiving the same hourly rate of pay fall within more than one quartile band, the employer must, so far as possible, ensure the relative proportion of male and female employees receiving that rate of pay is the same in each of those bands.
  2. The explanatory note says that a failure to comply with an obligation imposed by the Regulations constitutes an “unlawful act” under section 34 of the Equality Act 2006, empowering the Equality and Human Rights Commission to take enforcement action.

For more information on how we can help your business contact Lisa Kelly.