The gender pay gap

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In December the long-awaited final draft of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 was published, setting out the reporting obligations that will apply to organisations with 250 or more employees.

You may recall we discussed the draft regulations in August. To recap, the basic requirements were to take a ‘snapshot’ on one day a year and to publish:

  • the mean and median hourly pay gap between men and women
  • the number of men and number of women paid a bonus each year
  • the mean bonus gap between men and women
  • the number of men and the number of women in each pay quartile.

Not a great deal has changed in the updated regulations but there are some points for employers to note:

  • The first snapshot date has changed to 5 April 2017 and the same date will be used in subsequent years
  • The definition of employee has been changed to reflect the wide definition in the Equality Act 2010. Some employers will need to look carefully at who should be included in their reporting; cases such as the one recently brought by the Uber drivers demonstrate that it is not always easy to be sure about employment status.
  • However there are some new exclusions too. Only those employees receiving full pay at the relevant time are captured so, for example, those on sick leave or family leave don’t need to be included. There is also no obligation to include employees where the employer does not have the relevant pay data (and cannot reasonably obtain it).
  • The median bonus gap must be published (so mirroring the obligation in respect of the hourly pay gap).
  • Detailed guidance has been given about exactly how the calculations must be carried out, e.g. how pay and bonuses are defined, and how the quartiles are determined.

Unfortunately some uncertainties still remain, such as whether employees outside Great Britain need to be included, or how salary sacrifice arrangements should be dealt with. However, further guidance is due to be published once the draft regulations have been approved and it is hoped that some of these issues will be addressed there.

In the meantime, with the first snapshot rapidly approaching, employers are well advised to take steps to assess what their likely gender pay gap figures will look like and how they would seek to address (or explain) them, if necessary.

Dom Bonham