Almost 10 months after publishing draft Regulations requiring employers of more than 250 employees to report on their gender pay gap the final Gender Pay Gap Regulations have been published. So what, if anything, has changed, and after lengthy consideration of the problems thrown up by the original draft Regulations, has everything been clarified?
In our Blog on the consultation on the original draft Regulations we highlighted the key aspects of the draft Regulations. The new Regulations that will come into force on 6 April 2017 are broadly similar but a number of key changes have been made.
A key point to note is that the Regulations now have teeth: the Government has confirmed that a failure to comply with the Regulations will constitute an "unlawful act" which could result in the Equality and Human Rights Commission (EHRC) taking enforcement action, a potential public relations disaster for any employer and helpful prompt to senior managers, if needed, to ensure compliance with the Regulations.
The Government has also brought forward the timetable! Employers are now required to report on or before 4 April 2018 on their gender pay gap, based on a snapshot of data taken on 5 April 2017.
The final Regulations also:
- include a new, wider definition of what is meant by employment with the scope to exclude some contractors if an employer does not have, and it is not reasonably practical to obtain, data about them
- exclude employees on reduced or nil pay as a result of leave during the relevant pay period, whether it be annual leave, sick leave, maternity, paternity, adoption, parental or shared parental leave, and special leave
- now require employers to report on their mean and median bonus pay gap (previously it was mean only). They also clarify that only the portion of bonus pay that is relevant to the relevant pay period should be included in the bonus pay calculation, thereby addressing the criticism that an annual bonus paid in the relevant pay period would distort the figures
- include a new definition of bonus and, in particular, that in relation to securities, securities options, or interests in securities, they are to be treated as paid when they give rise to any taxable earnings and that the value to be included in any bonus pay gap calculation is the amount subject to tax. What this means in practice will require careful consideration and throws up questions in relation to awards under tax advantaged share plans and employee ownership trusts.
- clarify that the publication of information in relation to the proportion of men and women in each of the four pay quartiles relates to four equal numbered groups of employees (rather than split the pay range into four bands).
The final Regulations are more detailed and complex than the original draft Regulations and while they address some concerns raised in relation the original draft Regulations not all points have been clarified. In addition to the potentially damaging prospect of EHRC enforcement action, poor presentation of your gender pay gap could affect recruitment, employee relations and your organisation's reputation. We are working closely with a number of organisations on the collation and presentation of their pay data, and we can assist you with tailored, practical guidance on what the final Regulations mean for your organisation, the steps that you need to take to collate your gender pay gap information and how to present that information (both internally and externally).