The government has published its final draft of The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Parliament will now have to approve the Regulations before they come into effect in April 2017.
Consequently, larger employers (those with 250 or more employees) in the private and voluntary sectors will need to ensure they are ready and review pay practices and payroll systems ahead of the changes.
What will employers need to do under the Regulations?
Essentially, employers will need to publish an annual report setting out the mean and median gender pay gap, the number of men and women who received bonuses and details about the mean and median bonus pay gap, and the percentage of men and women in each salary quartile.
Key changes to the Regulations
These requirements remain largely unchanged in the final draft version of the Regulations. However, there are some key changes to the final version that employers need to be aware of.
The data must be collected on 5 April each year and the subsequent report published within 12 months. This will start on 5 April 2017.
This means employees and also workers (including self-employed consultants who are used to supply the services personally) who are employed on the ‘snapshot date’.
Workers not on payroll system
If employers cannot reasonably obtain data on any workers then they do not need to report on them (although these workers will still be included in the headcount number which determines whether the 250 employee threshold for requiring a report is reached). This removes any difficulty of employers reporting on workers who are not on their payroll systems.
Calculating differences in hourly pay rates
Employers should only include full-pay employees when calculating differences in the hourly pay rates of male and female employees. Therefore employees on reduced pay (such as sick pay or maternity leave) should not be included.
Calculating gross hourly pay
To calculate gross hourly pay, employers must use an employee’s normal working hours where possible. If the working hours change each week, the average working hours across a twelve week reference period should be used. For those who have no normal working hours (including senior management), the employer should use “a number which fairly represents the number of working hours in a week having regard to” the average hours worked by that employee and others in the same role.
Calculating quartile pay bands
Employees must be ranked from lowest to highest pay, then divided into four equal groups (with the same number of employees in each quartile). The percentage of male and female employees in each quartile must be reported.