Gender Pay – The Revised Regulations and what to do now

This week the Government has laid its revised Gender Pay Gap Regulations before Parliament for approval (the “Regulations”). It is expected that the Regulations will be passed by the end of January and come into force in April 2017.

What has changed?

The Regulations have made some significant changes to the previous draft addressing various issues, in particular:

• ‘Relevant employees’ are to be defined broadly, to include those who work under a contract of employment, a contract of apprenticeship or a contract personally to do work, mirroring the position under the Equality Act 2010 (save for Partners in firms).
• Those who are on reduced rates of pay (including no pay) are excluded from the calculations as the Regulations refer to ‘full-pay’ relevant employees.  This could include, for example, those on maternity leave or sickness absence.
• The four pay quartiles will be split into equal numbers of employees.
• The calculations required for reporting on the gender-bonus gap have been extended, now requiring both a mean and median calculation.
• There has been further clarification on calculating hourly rates of pay and how bonuses should be defined.
• Non-compliance with the Regulations will be an ‘unlawful act’ under the Equality Act 2006 empowering the Equality and Human Rights Commission to take action.

There are still some areas which require further clarification, like the treatment of deferred bonuses, however, it is hoped that ACAS guidance will shed light on the remaining issues.

What do employers need to report on under the Regulations?

Employers with over 250 employees will need to produce the following information in an annual report:

1. The mean and median gender pay gap figures based on hourly rate of pay of full-pay employees; and
2. The mean and median gender bonus gap figures; and
3. The proportions of male and female employees paid bonus pay; and
4. The proportions of male and female full-pay employees in the lower, lower middle, upper middle and upper quartile pay bands

With the first pay data ‘snapshot’ date now proposed as 5^th April 2017 (altered from the 30^th April proposed previously), what can organisations be doing now in preparation?

• Carry out a test run allowing you to identify any gender pay gaps in the organisation
• Consider appointing a team responsible for the above who will be able to access data securely and calculate the figures required
• Carry out investigation into any issues now so that these can be explained in the optional narrative of the report if necessary
• Consider long-term strategies to address any issues identified such as the development of a mentoring programme to encourage the promotion of women into senior roles and/or improved flexible working practices to ensure female talent is retained within the organisation.
• Ensure key stakeholders in the organisation (including those who will be signing off the report) are aware of the Regulations and kept fully updated on the steps being taken, the organisation’s obligations and key days for compliance.