A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
Subject to parliamentary approval (which we believe is likely), the Regulations will come into force on 6 April 2017. So what do you need to know about the revised Regulations to prepare for mandatory reporting and how can you get a step ahead? We answer some of the most common questions:
We employ less than 250 employees at the moment, do the Regulations apply to our organisation?
The number of employees you need to have to be caught by the Regulations remains at 250. This will not apply so as to require aggregation across a Group structure; welcome news if you employ less than 250 employees in a particular entity. However, this exemption will not apply if you use joint employment contracts.
The ‘snapshot’ date for assessing your employee figures (and for reporting requirements) has changed to 5 April every year. If you know that your organisation sits on the threshold for reporting requirements, reviewing your employee figures regularly may be a sensible step.
Can I ignore our zero-hour or bank staff for the purposes of the calculations?
Less welcome news.
As expected, the definition of an “employee” has been widened. It will now include any person employed by the employer under
- A contract of employment;
- A contract of apprenticeship; or
- A contract personally to do work.
This will include zero hour and other workers and employees working under atypical contracts. It could also include self-employed contractors if they meet the wider definition of employee.
(There is an exception for certain workers in circumstances where the employer does not have, and it is not reasonably practical for them to obtain, the relevant data required for inclusion in the mandatory reporting, but we expect this will be narrowly applied).
We have lots of employees on parental and sick leave in receipt of reduced pay, will this distort our pay gap?
Yes, but the Government has addressed this.
The calculations of pay are to be based on ‘full pay relevant employees’. Therefore, this will not include the pay of any employee at a reduced or nil rate due to being on leave, such as maternity, parental or sick leave. This will lower the chance of an artificially larger pay gap as a result of a significant number of employees being on parental or sick leave.
How do I calculate hourly rates of pay when our employees don’t work regular hours?
The Regulations also bring clarity here.
For those employees without normal working hours, the position mirrors that of other employment legislation where an average over the previous 12 working weeks is to be taken in the first instance.
What other pay do I include?
This can get confusing.
The revised Regulations have not addressed the discrepancy between certain types of pay, whereby an employee in receipt of a shift premium for weekend working will have that inflated pay included in their pay figure. However, where that pay is received as overtime it will not. This could easily distort figures and will be worth considering how much this will impact your organisation.
In addition, pay will not include non-monetary remuneration. So, for example, an Executive in receipt of a car allowance will have that ‘pay’ included, whereas an Executive in receipt of a company car will not.
Has the position with reporting on gender bonus gap changed?
Employers are now required to publish both mean and median data for bonuses to bring it into line with gender pay reporting.
The definition of ‘bonus pay’ has also been clarified and will reduce the likelihood of employers having to report on bonuses twice, once in their gender pay gap figure and again with their gender bonus gap figure. The rules around this can be complicated, and we suggest taking specific advice if this applies.
Do I have to publish the salary figures for our quartile pay bands?
The Regulations only require you to publish the percentage of men and women in each of your four pay bands.
What are my risks going forward?
There is no specific enforcement mechanism or penalties under the Regulations for non-compliance or having a gender pay gap.
However, the impact of publishing a gender pay gap should not be underestimated. If your data shows any gender pay discrepancies this may lead to your report being more publically discussed, scrutinised and challenged by employees and potentially Unions. It could also lead to employee disengagement and increase the number of gender-related pay complaints that you receive. Ultimately, it could also have an impact on relationships with your stakeholders. Therefore, working through these issues quickly and effectively will become vital going forward.
What should you do now?
We are urging all employers to take steps now to understand in more detail how the Gender Pay Regulations (as currently drafted) will affect them. Our top tips are to:
- Carry out in-depth assessments of your workforce to establish who may be captured as an “employee” and what will be regarded as “pay” in light of the revised Regulations;
- Carry out a pay audit to identify what your likely gender pay gap will be and the reasons for this;
- Consider what information you will want to add to any gender pay report to set your figures in context and explain an unusual pay gap;
- Start to plan a strategy to address any gender pay gap;
- Consider your communication strategy, both internally and externally, for when you publish your gender pay gap figure;
- If possible, benchmark your gender pay gap within your industry to identify whether your figures are likely to be an issue.
We have also put together a simple questionnaire that will enable you to quickly assess your current situation: Gender Pay Reporting Audit.
For further information
For further details about the Regulations, whether they apply to you and what to do to prepare for them, please see our previous briefing Mind the gender pay gap!
If you would like to discuss specific queries or the impact this could have on your organisation, please get in touch with Kate Watkins, or call us on 0121 212 7494 to speak to a member of the employment team.
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