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All I want for Christmas is…an end to poverty…world peace…and to eliminate the gender pay gap

…all tall orders you may well agree. When Theresa May became Prime Minister in July this year, she acknowledged that “if you’re a woman, you will earn less than a man”. Figures published in the autumn by the Office for National Statistics showed that the pay gap was falling by just 0.2% per year, meaning that it will take a further 47 years before men and women achieve pay parity…a tall order indeed.

Next April, new legislation will take effect aimed at reducing the gender pay gap by requiring employers to calculate and publish their gender pay gap figures. Presumably, the expectation is that employers with a large but unexplained gender pay gap will feel the need to do something about it – either due to employee/Union pressure, general shame or adverse media commentary.

The draft legislation was published earlier this year. This has now been amended, following consultation, and a new draft (expected to be the final draft) has now been issued. The headlines are as follows:

  • the rules will apply to employers who have 250 or more employees;
  • the term “employees” includes self-employed workers such as consultants and independent contractors, but excludes partners and LLP members;
  • calculations have to be made as at the “snapshot date”, which has been changed to 5 April every year, with the first reporting date being 5 April 2017;
  • employers will have until 4 April of the following year to report – so the deadline for the first publication will be 4 April 2018;
  • employers will have to calculate the mean and median gender pay gaps, as well as splitting employees into pay quartiles showing the percentage of men and women in each of four pay bands;
  • employers will also have to publish mean and median bonus pay information, showing the difference between bonuses paid to men and those paid to women;
  • employees who are being paid a reduced rate on the snapshot date – for example, because they are on maternity leave or sick leave – will not be included in the calculations.

The pay rates are compared on the basis of a calculation of the hourly rate of pay, and the Government has set out a six-step calculation process to assist employers. Interestingly, when making the calculations, employers are to treat a month as having 30.44 days and a year as having 365.25 days. So, when you’re partying away in the wee small hours of New Year’s Day, spare a thought for diversity lawyers, who will be working on their gender pay gap calculations for another six hours before they can celebrate the beginning of 2017…

For further information relating to the points raised in this article, please contact Louise Connacher.

We will be covering the new gender pay gap legislation at our annual employment update seminars next March. Keep an eye on our events page for booking details.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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