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Gender pay gap reporting: Employers and thresholds

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20th Mar 2017
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The gender pay gap regulations come into force on 31 March and 6 April 2017 for the public sector and for private and voluntary sector employers, respectively. Terri Bethel examines the regulations, who is included and what information employers need to collect and publish.

While the deadline for publishing gender pay gap (GPG) information is still 12 months away, the underlying data comes from March or April. The first question is to answer, though, is: Do the regulations apply to me?

There are slight differences between the regulations for the public, private and voluntary sectors, including identifying which organisations the regulations apply to. Simply put, the duty to collect and report gender pay gap (GPG) information applies to:

  • employers with 250 or more relevant employees on the snapshot date.

We’ll consider each element in turn.

Employers – public sector

For the public sector regulations, potential employers are those organisations listed in Schedule 19 of the Equality Act 2010, as subsequently amended. However, the Act devolves the public sector duties to Scotland and Wales, so the GPG regulations include a list of public sector bodies in England, plus specific cross-border bodies, that are affected by the legislation. (The Act applies to Great Britain, so Northern Ireland is excluded.)

Headcount is established at the level of the organisation as listed.

Employers – private and voluntary sectors

The private and voluntary sector regulations apply to employers in these sectors, excluding any government department or part of the armed forces that are not listed in the public sector schedule.

The duty applies to all employers regardless of where the employer is based in the world – its scope is based on the location of the employee, not the employer.

Where an agency or employment intermediary is itself in the private or voluntary sector, it will be subject to the private and voluntary sector regulations, regardless of which sector the workers are placed in.

An employer is a single legal entity: a limited company, a partnership, and so on. It has nothing to do with how many PAYE references an employer has.

Each employer in a group structure has its own responsibility for GPG reporting if its headcount is high enough. If none of the employers in a group meets the threshold, then there is no reporting duty, even if the sum of their headcounts exceeds the threshold.

The snapshot date

The snapshot date is 31 March in the public sector and 5 April in the private and voluntary sectors.

Relevant employee

A relevant employee is an employee within the definition of the Equality Act 2010, which is wider than the standard employment law definition. Employment includes:

  • working under an employment contract, an apprenticeship contract or being contracted ‘personally to do work’
  • crown employment or as a relevant staff member of the House of Commons or House of Lords

The GPG headcount therefore includes employees with an employment contract, apprentices, workers (with a contract to do work or to provide services) and self-employed people who have to perform the work personally.

Volunteers and the genuinely self-employed are excluded from the extended definition of employee. Partners in a firm, including members of a limited liability partnership (LLP) (but not salaried partners) are specifically excluded from the definition of a ‘relevant employee’ in the private and voluntary sector regulations.

A relevant employee must be under contract on the snapshot date itself. Starters after the snapshot date and leavers before it are not included in the headcount. The employee’s length of service is not relevant. An employee with a zero-hours contract would be included because the contract is ongoing, even if the employee had been given no hours on that date. The same principle applies to workers who are not scheduled to work on the snapshot date, such as those on rest days, anyone on holiday and anyone on family leave.

Note, however, that a casual (or ‘bank’) worker will not be included in the headcount unless a contract to do a spell of work exists on the snapshot date. Where there is no obligation to offer work, or to undertake the work that is offered, there is no ongoing contract in between each spell of work.

Agency workers and workers who are employed by an employment intermediary count in the agency’s or the intermediary’s headcount, rather than in the headcount of the organisation where they are placed to work or to provide a service.

The headcount is calculated by counting the individuals, not the full-time equivalents.

For the public sector, once the employer has been identified as within scope (see above), everyone employed on 31 March is included, regardless of where in the UK they ordinarily work.

For the private and voluntary sector, the employers could be based anywhere in the world. Only employees who ordinarily work in Great Britain are counted. Because the Equality Act 2010 applies to Great Britain, employees who work in Northern Ireland are treated as ‘overseas’ workers, for these purposes.

In the headcount but not in the stats

It is worth noting that inclusion in the headcount does not necessarily mean that the individual’s data will be included in the GPG data collection and analysis.

There are several reasons why an employee might not be included in the data collection at all:

  • the employee receives no ordinary pay in the relevant pay period and receives no bonus pay in the relevant bonus period
  • the employee chooses not to self-identify as either male or female
  • the employee works under a ‘contract personally to do work’ with the employer but full details about the employee’s pay and hours are not held by the employer and are not reasonably obtainable.

It is also possible for an employee to be included in some figures and not in others. ‘Full-pay relevant employees’ are included in all the figures. Relevant employees whose pay during the relevant pay period has been reduced because of being on leave are excluded from the gender pay gap figures and the pay distribution figures, both of which use hourly pay rates. They are only included in the bonus pay figures.

Conclusion

Once the employer has identified which regulations apply, who to include in the headcount and whether the headcount on the relevant snapshot date is at least 250 employees, then the employer will know whether it has a GPG reporting duty.

Of course, that is only the very first stage. Next, the employer has to collect gender and mandatory pay data for all the relevant employees, for the relevant pay period and relevant bonus period as determined by the snapshot date. As explained above, less detail is needed for some employees than for others, and some of those included in the headcount might be excluded from the collection of data entirely.

There remains some uncertainty, however. The public sector regulations received parliamentary approval last week but, with only a few days left before they come into force, Acas and the Government Equalities Office have yet to publish any guidance. Will they explain, for example, whether private sector organisations listed in the schedule in respect of their public functions are subject to both sets of regulations?

Although employers have 12 months after the snapshot date to publish the GPG information, in March or April they should identify whether they have a GPG reporting duty, and should ensure that the data is collected, even if it is not analysed at that stage. This might simply involve taking a copy of the payroll database at that point, although it is worth confirming that all the necessary data exists in that system … which is a topic for another day.

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By cheshiremouldings
20th Mar 2017 16:16

We've been looking forward to some positive change in the gender pay gap for a long, long time.

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