Final Gender Pay Gap Regulations Published - 5 Things You Need to Know as an Employer
The government has this week published the much anticipated and long awaited final draft gender pay gap reporting regulations.
The regulations are expected to come into force on 6 April 2017, with the deadline for publication of the first round of pay data being 4 April 2018.
The final draft regulations incorporate a number of amendments to the draft legislation. One important point is that the 'snapshot' date, which should be used to gather pay data, has moved from 30 April to 5 April each year.
The Regulations also helpfully clarify a number of areas that were previously either unclear or a cause for concern for employers. This includes:
- calculations to be based on employees in receipt of their usual salary on 5 April 2017 - confirmation that employers should base their calculations only on employees in receipt of their usual salary during the pay reference period. Under the previous draft regulations, employers were required to take into account the actual pay of all staff, including those not in receipt of their usual salary for any reason (i.e. because of a period of maternity leave). This would have distorted pay data by potentially creating an exaggerated gender pay gap. The updated draft regulations should avoid the artificial inflation of any gender pay gap on this basis.
- calculation of hourly rate for staff with irregular weekly paid hours - a detailed method of calculating the gross hourly rate of pay for staff who do not have regular weekly paid hours has been included in the updated regulations. This calculation method will be particularly helpful for employers who engage casual staff, staff on zero hours contracts, or staff who work under other irregular working patterns.
- bonus payments - where an employer pays a bonus on an annual basis, only the proportion of the bonus payable in respect of the pay period itself should be taken into account when calculating the gender pay gap. Consideration will need to be given as to how any bonus is pro-rated.
- definition of relevant employees - the definition of 'relevant employee' has been amended so that it is now expressly clear that the regulations include workers and employees.
- pay quartiles - the definition of pay quartile bands has been clarified to make clear that each pay quartile should contain the same number of employees.
Best Practice
Employers have the opportunity to use the time between now and the first 'snapshot' date, to undertake a trial pay data analysis, including a detailed risk assessment of potential problem areas, and consideration of how best to report the data externally by 2018. You can find more information in our gender pay gap regulations FAQs.