Gender Pay Gap reporting

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 have now come into force. All private and voluntary-sector employers with 250 or more employees have to publish specific information about their gender pay gap.

Who should be included?

Whether or not agency workers and contractors should be included in the calculation of an organisation’s gender pay gap will depend on whether or not they fall within the definition of employee used in the relevant Regulations.

The term ’employee’ is defined for the purposes of the Regulations by Section 83 of the Equality Act 2010. This includes people who have a contract personally to do work; that could include some self-employed contractors. Employers should not include in their calculations any agency worker or contractor who does not have a contract with the employer (either a contract of employment or a contract personally to do work).

There is an exception under Regulation 2(3) in relation to people employed under a contract personally to do work. The employer may not have the information they need to include that person in the calculations. If it’s not reasonably practicable for them to get that information, they don’t have to include that person in the calculations.

If agency workers have a contract with the agency, either an employment contract or a contract personally to do work, they would be included in the gender pay gap calculations.

What are the publication deadlines?

The first information is due to be published in April 2018, but this distant deadline is no excuse for complacency on the part of affected employers. That information will relate to pay details in the pay period that includes 30th April 2017 and bonus pay details relating to bonuses paid between 1st May 2016 and 30th April 2017.

Therefore, bonuses paid over the next year or so will form the basis of part of the first set of published figures.

What should be published?

The Regulations require the following information to be published:

• mean and median gender pay gaps

• the difference in mean bonus payments

• the number of male and female employees that receive a bonus as a proportion of the overall workforce

• men and women by quartile of the organisation’s pay distribution

These details should be accompanied by a signed statement of accuracy, which will confirm that the published information is accurate.

What is pay?

Pay, for the purposes of the Regulations, will include:

• basic pay

• maternity pay

• shift premium pay

• area allowances

• paid leave

• sick pay

• bonus pay

• other pay (including car allowances paid through the payroll, on call and standby allowances, clothing, first aider or fire warden allowances).

It will not include:

• expenses

• overtime pay

• benefits in kind

• the value of salary sacrifice schemes,

• arrears of pay

• redundancy pay,

• tax credits.

Mean pay gaps

The mean pay gap is the difference between the average hourly earnings of female employees (taken as a single group) and the average hourly earnings of its male employees (again taken as a single group).

Median pay gaps

The median gender pay gap is the difference between the mid-point value of hourly earnings of female employees (taken as a single group) and the mid-point value of hourly earnings of its male employees (again taken as a single group).

Proportion of men and women who receive bonuses

The Regulations will also require employers to publish the proportion of male and female employees who receive a bonus as well as the mean gender bonus gap, which is the difference in average bonus pay paid to men and women during the period of 12 months to 30th April each year. The proportion of male and female employees who received bonus pay during the period of 12 months preceding the relevant date is also required.

Bonus pay includes payments in relation to

• profit sharing,

• productivity,

• performance

• other bonus or incentive pay,

• piecework and commission,

• long term incentive plans and

• the cash equivalent value of shares on the day of payment.

Gender pay split between quartile pay bands

Employers will have to divide their overall pay range into four pay bands (based on their overall pay range), containing equal numbers of employees, and report the gender split in each of those four pay bands.

Where to publish?

When a business’ gender pay gap details are complete, they must be signed by a director or officer of equivalent rank to certify that they are accurate. The details must then be published in English on the company website, in a way that is accessible to both employees and the public. The details must be kept on the website for at least three years.

The information must also be uploaded to a government sponsored website that will be established for the purpose. This will give the Government the ability to produce statistics that will give an indication of the success (or otherwise) of equal pay initiatives. It will also enable people to compare the performance of their organisation with all affected businesses in general.

Rradar recommends:

• Reviewing the employment status of employees, particularly regarding what constitutes a ‘relevant employee’.

• Consider what constitutes ‘bonus schemes’ and if they need to be included in any reports.

• Calculate gender pay gap information using the draft regulations methodology to anticipate company information and detail of the report.