The key changes in the revised regulations, which are still subject to approval by Parliament, are outlined below: 

Timing

The regulations will come into force on 6 April 2017 and the “snapshot” date on which pay data must be measured has moved forwards from 30 April to 5 April. This is so that employers do not need to collect data across more than one tax year.  This means that the first disclosures are now required by 5 April 2018 at the latest. 

Relevant employee

The definition has been simplified and now refers to a person who is employed by the relevant employer. The explanatory note to the regulations confirms that this includes apprentices and self-employed contractors who are obliged to perform work personally, unless it is not reasonably practicable to do so. 

Relevant employer

The revised regulations exclude public sector employers although similar regulations are expected to apply in due course. 

Definition of pay

Hourly pay consists of both ordinary pay and bonus pay paid in the reference period.

Ordinary pay includes basic pay and payments for leave, which has been defined to include annual leave; maternity, paternity, adoption, parental or shared parental leave; sick leave; and special leave. Termination payments are now expressly excluded.

The definition of bonus pay has been clarified and includes pay “in the form of money, vouchers, securities, securities options or interests in securities that relates to profit sharing, productivity, performance, incentives or commission”.

Shares and options will be treated as paid at the time when an income tax charge arises and will be valued based on their taxable value at this time. 

Pay gap calculation

The calculation of both the mean and median pay gaps now explicitly refer only to “full-pay” employees, who are defined as employees who are not being paid at a reduced rate due to being on leave. This clarified the concerns that many employers had about maternity or other family leave skewing the figures. 

Quartile pay bands

The revised regulations clarify that the quartile pay bands should be calculated by ranking employees in order from lowest paid to highest paid and dividing them into equal sized groups. Employers will be required to disclose the proportion of males and females in each band, rather than absolute numbers. 

Bonus calculations to be published

The revised regulations will require employers to publish the difference between the median in addition to the mean bonuses paid to male and female employees (the earlier draft regulations only required the mean). 

Detailed steps to calculating the hourly rate of pay and weekly working hours are now included, providing welcome clarification particularly for employees with irregular hours. 

Non-compliance

The explanatory notes to the regulations state that non-compliance will be an ‘unlawful act’ which will empower the Equality and Human Rights Commission to take enforcement action. 

The Government will be publishing additional guidance to support the implementation of the regulations in due course. 

The revised draft regulations can be found here (link to draft regulations) and the explanatory memorandum is here (link to legislation.gov.uk).  Our news item on the February consultation is here.

*Update 03 March 2017 - the Regulations have now been approved by Parliament and will come into force on 6 April 2017.  No changes have been made from the draft Regulations.  The Regulations are available here (link to legislation.gov.uk).