The government published final draft regulations for gender pay gap reporting in December 2016, providing further clarification around the information that employers will have to report.
The regulations, which are due to come into effect in April 2017, will require organisations with 250 or more employees to publish the difference between both the mean and median hourly rate of pay for male and female full-time employees; the difference between both the mean bonus pay and median bonus pay for male and female employees; the proportions of male and female employees who were awarded bonus pay; and the proportions of male and female full-time employees in the lower, lower middle, upper middle and upper quartile pay bands.
These figures will need to be published within the 12 months following the designated snapshot date of 5 April every year. The figures, along with a written statement confirming their accuracy, must be published on the organisation’s website and must be accessible to employees and the public for at least three years from the publication date. Ideally, these will be accompanied by a voluntary written narrative to provide context.
Although the key points of the reporting requirements remain the same, the final draft regulations do highlight some subtle differences and offer some clarification around methodology and definition of terms. For example, the snapshot date has changed from 30 April to 5 April, and methodology for the calculation of pay quartiles has been provided.
The definition of an employee has been confirmed, as questions had been raised about whether limited liability partnership (LLP) members would be included in the calculations. Esther Smith, employment partner at law firm TLT, said: “[There is] further clarity in the final [regulations] that genuine partners are excluded.”
For the purposes of the regulations, ‘employment’ follows the definition provided under the Equality Act 2010, and includes employment under a contract of employment, a contract of apprenticeship or a contract personally to do work.
Staff who are not on full pay, for example if they are on maternity leave, sabbatical or on sick leave, will not be included in the pay figures. Suzanne Horne, partner and employment lawyer at Paul Hastings, said: “Someone from HR is going to need to sit down and go through what is the current status of that individual, are they on full pay, are they not on full pay? There’s a lot of analysis that is going to need to go into this, which is probably more than people think. They might just think that it’s salary [but] it’s not that straightforward when [being applied by] some of these larger organisations which have complicated pay and benefits systems.”
Wording defining employees who fall within the scope of the reporting requirements as being based in the UK has now been removed, so those who are on a UK contract but based outside of the UK could now be included. Smith said: “If [an organisation has] got 200 people in this country and 50 people in Northern Ireland, but they’ve got UK contracts run by the UK [organisation], do [they] include those [employees in] Northern Ireland, which then gets [them] into the 250 qualifying employees for the purpose of reporting?
“It’s one area of uncertainty that has opened up rather than been narrowed down by [draft] final regulations. The cautious view is to report on everybody.”