Stronachs Logo

In this latest in our series of blog articles on the Equality Act (Gender Pay Gap Information) Regulations 2017, (see Mind the Gap Please! Gender Pay Reporting and Equal Pay) we will examine the final draft of the Regulations which were published this month and the changes and clarifications that have been made to them.

Summary of key obligations

To briefly recap our previous posts, the Regulations require employers who have 250 or more relevant employees on the so-called ‘snapshot date’ to publish the mean and median hourly gap in pay between male and female employees for the pay period which the snapshot date falls within. The difference between annual bonuses between men and women must also be published, as well as the number of men and women in ‘quartile pay bands’. The information must be published each year within 12 months of the snapshot date and must remain on the employer’s website for at least 3 years. As discussed in our previous blog, the Regulations do not cover Scottish public sector employers, who are already covered by specific Scottish legislation.

Key changes

There have been some changes made to the Regulations in this final draft which are important for employers to note. Firstly, the ‘snapshot date’ is now 5 April, rather than 30 April. This means that the first reports will be due by 4 April 2018 for the employers who fall within the scope of the Regulations.

The range of individuals who fall within the regulations has also been clarified, as the new regulations use the definition from the Equality Act 2010, encompassing, for instance, many self-employed contractors and workers who are engaged under a contract to work personally for a company. Not only will they have to be included in the reports, but employers who previously though that they were not caught by the 250 employee limit may now fall within its scope.

Partners, including members of LLPs, are now specifically excluded from the scope of the regulations. Also excluded are employees who are on leave and therefore receiving less than their normal pay in the relevant pay period for example, an employee on maternity leave or sick leave who was receiving less than their full pay. However, these employees are still taken into account for the purposes of the bonus comparison. This change addresses the potential problem an employer could face if a significant number of the workforce were on sick leave or maternity leave on the snapshot date, thereby making the pay gap appear larger than it would otherwise be.

The Regulations also now detail how the ‘quartiles’ are to be determined. In essence, all employees on full pay on the snapshot date are ranked in order of their hourly rate of pay. The employees are then divided into four equal (as far as possible) quartiles, called lower, lower middle, upper middle, and upper, and the proportion of female employees in each band is then expressed as a percentage of all employees in that band.

In relation to bonuses, the re-draft clarifies that bonuses in the form of securities, options, or interests in securities are deemed paid at the time when they give rise to income tax thereby replacing the somewhat more ambiguous previous drafting of bonuses “received and earned”. It should be noted that the bonuses received by all employees are relevant, as opposed to the income comparison where employees receiving less than their normal pay are not included. Therefore, employers should take care to include any bonuses received by, for instance, women who are on maternity leave on the snapshot date but who received a bonus in the 12 months prior to that date.

As noted in our previous blog, the question of enforcement of the Regulations had been up in the air, with formal civil enforcement seeming unlikely and with numerous alternative suggestions being discussed, such as publication of the details of employers who do not comply with the regulations. Although the Regulations do not contain any provision relating to enforcement, the explanatory notes state that a failure to comply with an obligation imposed by the Regulations is an ‘unlawful act’ within the meaning of the Equality Act 2006, which empowers the Equality and Human Rights Commission (‘EHRC’) to take enforcement action. Currently, the EHRC has the power to carry out investigations, issue unlawful act notices and action plans, and to seek interdict against an organisation to prevent them from committing an unlawful act. How these powers will be applied to the gender pay gap reporting Regulations remains to be seen. 

Actions for employers

Now that we know what the final Regulations will encompass, employers can start preparing for the Regulations to come into force. For employers who think that they may come within the scope of the legislation, it is important to ensure that accurate records of the necessary information regarding bonuses given to employees from 6 April 2016 onwards are retained, as this will be required for the period which ends on the snapshot date of 5 April 2017. It is also important that records of hours worked by employees with no regular working times are kept to allow the necessary calculations to be made in relation to hourly rates. Finally, employers should ensure that they diarise to publish the data in time for the deadline (being 12 months after the snapshot date).

If you are unsure about whether the Regulations will apply to your organisations or if you would like advice on any other matter related to the Regulations please get in touch with a member of our Stronachs’ Employment Team.

Annika Neukirch, Solicitor

 

Chambers UK 2018

Contact Info

ABERDEEN OFFICE
28 Albyn Place, Aberdeen AB10 1YL
Tel: +44 1224 845845

 

INVERNESS OFFICE
Camas House, Pavilion 3, Fairways
Business Park, Inverness IV2 6AA
Tel: + 44 1463 713225

The Legal 500 logo