In February this year, draft gender pay gap reporting regulations were published and comments were invited. There then followed an extended period while we waited for the final regulations to be published and the (many) consultation questions to be addressed. One could speculate about the chaos caused by Brexit [in Parliament] that caused this extended waiting period, but we won’t. The main thing is that the final regulations are at last here and (subject to parliamentary approval) will come into force on April 6, 2017.
As a quick recap the regulations require that employers with 250 or more employees publish certain statistics and information regarding the gender pay gap of their workforce on an annual basis, starting in April 2018. This is about the gap between the average pay of men and the average pay of women – it is not about equal pay for equal work – so because of representation issues in the work force, no doubt such a gap will be found to exist.
Happily, some of the more ill-conceived elements of the earlier draft regulations have been addressed. In particular, the loophole that meant women on statutory maternity pay would have had that lower pay, rather than their actual pay, count as their pay for the calculation, has been removed. The potential double counting of bonus in both pay and bonus pay has also been ironed out, so that it is clarified that only a proportion of bonus pay should be included in the calculation of ‘pay’, not the entire year’s bonus if it happened to be paid in April.
There are two main changes that are worth paying attention to and these are that the dates for grabbing and publishing the data have changed from the end of April to the beginning of April. This means that for the coming year, the snapshot date is April 5, 2017 and the data has to be published within 12 months of that date (i.e. by 4 April 2018). The fact the snapshot date sits prior to the implementation date of the regulations is a bit strange but is workable provided there’s no napping going forward.
The other change which is slightly more alarming and probably more in keeping with actually listening to consultation responses, is that the explanatory notes to the final regulations state that a failure to comply with the obligation to publish the data constitutes an ‘unlawful act’ empowering the Equality and Human Rights Commission to take enforcement action. At the moment that is all the detail that we have as there is no enforcement information in the regulations themselves but presumably that will be added as they pass through Parliament. What is clear though is that there now may very well be risks and sanctions for not reporting, as previously the draft regulations did not provide for any sanctions and only talked about the government ‘keeping an eye’.
There is going to be guidance published in due course so, as more of the detail unfolds, we will be in touch but if you have any questions in the meantime on how to get yourself ready, contact our UK Pay Reporting Team or your contacts at Orrick.