On 6 December 2016, the government published the final version of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Subject to parliamentary approval, the regulations will come into force on 6 April 2017.
We provided an overview of the draft legislation in a previous article (read here); this piece summarises changes that have been made to the finalised version, in addition to providing a refresher on key aspects of the legislation.
Who do the regulations apply to?
To employers with 250+ employees within a particular entity (this will not apply to 250+ employees across a group structure) on 1st April 2017.
Readers should carefully consider if / when the regulations apply to them:
At present the regulations apply to private and voluntary employers, so charities and commercial subsidiaries will be affected. Housing Associations are currently classified as ‘public’, though should this change back to ‘private’, they will be obliged to report on their Gender Pay Gap Information. Regardless of the current classification of Housing Associations, the government plans to introduce similar Gender Pay Reporting obligations for public sector employers which will be introduced in early 2017 and consultation on this for public employers has already concluded. The public sector is already underpinned by the existing Public Sector Equality Duty and Gender Pay Reporting will not replace these existing duties, but will be an additional requirement for public sector bodies with 250+ employees. In any event, Housing Associations should already be preparing for their reporting obligations.
What has changed since the draft version of the regulations?
The key changes to note are:
- New dates confirmed for taking a snapshot of employee data (by 5 April 2017) and for publishing the information on the organisation’s website and a Government website (by 4 April 2018).
- The definition of an ’employee’ has been extended to include zero hour staff, self-employed contractors, apprentices, and bank staff. Employers need to therefore consider these workers in their count of total employees. This is particularly likely to affect care and support employers within the sector.
- Clarification to the information that must be reported on; including mean and median pay to include full-pay relevant employees, and for mean bonus and median bonus pay to be calculated for the 12 month period ending 5th April.
- Failure to comply with the regulations will constitute an ‘unlawful act’ within the meaning of section 34 of the Equality Act 2006 which empowers the Equality and Human Rights Commission to take enforcement action.
Are there any risks I should I be aware of?
Should organisations not comply with the regulations, or if they identify a significant gender pay gap, the potential impacts should be considered:
- Challenges with recruitment / attraction
- Difficulties retaining existing employees
- Having to provide the data as part of tender opportunities
- Having to provide the data as part of accreditation assessments (such as Investors in People)
- Detriment to employee engagement / satisfaction
- Equal pay claims
- Damage to company reputation
- Negative media exposure
- Impact on union relations
- Enforcement action on the part of the Equality and Human Rights Commission
- The Government has indicated that a ‘name and shame’ tactic could be followed but details have yet to be confirmed
What should I do now?
Private and voluntary sector employers that the regulations will affect from April 2017 should already be taking action. Public sector employers, and those in the housing sector should be starting to think about their forthcoming obligations for Gender Pay Reporting.
Firstly, employers need to review the total number of employees they have (including the broadened definition outlined above) to understand if the regulations will apply to them. Employers should then complete a thorough pay audit review to identify any key gaps in advance of their obligation to report. Employers should also consider options to address any gender pay gap issues as well as communication of gaps.
Altair provides a Gender Pay Reporting Audit service; identifying any gender pay gaps and providing bespoke recommendations designed to reduce gaps. Our team at Altair are uniquely placed with specialists in employment law, and reward and remuneration.
Altair also provides wider HR consultancy services for housing sector clients across the UK and Ireland. For more information, contact Kimberley Wallace HR Consultant at Altair on 07585 954 218 | firstname.lastname@example.org.