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Employment Law

Legal guidance - compliance - software

22 FEB 2016

Gender pay gap - draft regulations published

Gender pay gap - draft regulations published
Gemma Cawthray
Associate, Veale Wasbrough Vizards

The government has published the draft Equality Act (Gender Pay Gap Information) Regulations 2016 (the Regulations).

The Regulations are open for consultation until 11 March 2016 and are intended to come into force in October 2016.

What must be published?

Under the Regulations, employers will be required to publish the following information for each financial year:

  • the percentage difference in mean pay between male and female employees;
  • the percentage difference in median pay between male and female employees;
  • the percentage difference in the average bonuses received by male and female employees;
  • the proportion of men and women who receive bonuses; and 
  • the number of men and women in each quartile of pay within the workforce.
Who will the rules apply to?

Any employer (including individuals, limited companies and partnerships) with more than 250 'relevant employees' on the 30 April for that particular year.

'Relevant employees' for this purposes are those who ordinarily work in Great Britain and whose contract of employment is governed by UK legislation.

The following individuals will not count as relevant employees:

  • workers;
  • those genuinely self-employed;
  • contractors; and
  • LLP members.
The Regulations do not apply to public bodies.

What does 'pay' include?

Under the Regulations, 'pay' includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other allowances paid through payroll.

However, this does not include overtime, expenses, benefits in kind, redundancy pay or the value of salary sacrifice schemes.

Where and when must the information be published?

Employers must publish the information on their website (which must be accessible by the public).

The first trigger date for reporting will be 30 April 2017, but employers will be given 12 months to report. Therefore, the first reporting must be done by 30 April 2018. The information must be available on the employer's website for a minimum of three years to enable comparisons to be drawn with previous years.

Employers will also be required to upload the figures to the government website.

What are the penalties for non-compliance?

At present, there are no enforcement measures in the Regulations. However, the government has announced that this will be reviewed once the scheme has been running for two years.

Best practice

The introduction of gender pay gap reporting is one of the most significant employment law developments of 2016. Employers are encouraged to take the opportunity now to undertake an audit using the draft regulations as a guide, review the results, and address any risks that might be identified.

On a matter of detail, it seems a little odd that all types of overtime are excluded from the definition of pay in the draft regulations, especially as overtime payments have been a major issue in some the big equal pay claims in recent. It may be that the draft regulations will be amended during the consultation, for example to differentiate between compulsory and voluntary overtime. We will keep you updated on any changes in this area.
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