Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

On 6th December 2016, the Government published the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which will require large private sector businesses to publish gender-based pay statistics each year.

These Regulations are likely to come into force (subject to parliamentary approval) on 6th April 2017, and will essentially require employers with 250 or more employees (within the private and voluntary sectors) to publish gender pay information on their company website on 5th April 2018 and thereafter on an annual basis. The information must remain on the website for not less than three years and they must also submit this information to the Government each year (a Government website will be created where the information will have to be published, however details concerning the Government website will likely be released nearer 5th April 2017.)

The above has raised a number of questions from employers such as which individuals need to be taken into account for these purposes, and, exactly what information do they need to provide?

Firstly, in terms of the personnel be taken into account, the Regulations state that such individuals must be undertaking work for the business in a personal capacity, therefore consultants as well as employees, must be accounted for.

Secondly, with regards exactly what information must be provided, the following guidelines are given:

the difference in mean pay between male and female employees
the difference in median pay between male and female employees
the difference in mean bonus pay between male and female employees
the difference in median bonus pay between male and female employees
the proportions of male and female employees who were paid bonus pay
the proportions of male and female employees in each quartile of their pay distribution

The information must be collated from data taken on 5th April every year, starting with 5th April 2017. The bonus information should be based on the preceding 12-month period, beginning with the 12 months leading up to 5th April 2017.

What happens if my business does not comply?

Initial reaction to the introduction of the national living wage

Further to my previous blog post about the introduction of the national living wage (NLW), I was interested to read that not all of us think the effective increase to the national minimum wage will have a positive impact on the UK or its employees.

You will by now probably be aware that larger businesses such as Kingfisher (owners of the likes of B&Q and Screwfix) immediately put provisions in place to ensure that the introduction of the NLW had a minimal impact on their finances. Kingfisher, for example, advised all employees that although they will increase the hourly rate of pay to £7.66 across the board (regardless of age), they will remove benefits such as time and a half/double time for working on Sundays/bank holidays and the increased pay previously received by staff working in London. In addition they have cut summer and winter bonuses and advised employees that should they not agree to these changes and sign a new contract of employment, “unfortunately this will result in your dismissal”.

Workers have understandably reacted angrily to the changes and created a storm on social media by setting up a Facebook campaign and petition entitled “Don’t use living wage as an excuse to cut pay and benefits”.  Rumour has it that the campaign was set up by a B&Q Manager under the pseudonym of Kevin Smith, who wrote:

Those who have worked within the business for over a decade and know our customers and our business the best are losing thousands of pounds a year. Big businesses like B&Q are using the national living wage as an excuse to cut overall pay and rewards for the people that need it the most.

I hope that with the support of others, through signing this petition, we can influence B&Q and other businesses to reverse these changes. I also hope they acknowledge that treating people in this way will have a negative impact on their business in the future.

Currently (as of 5th April 2016) the petition has 134,074 supporters.

is rewarding good attendance discriminatory?

In Land Registry -v- Houghton and others the question for the Employment Appeal Tribunal was whether a scheme designed to reward good attendance was discriminatory in respect of disabled employees.

The Land Registry operated a discretionary bonus scheme which commenced in 2012. All eligible employees were entitled to £900. However, any employee who received a formal warning in respect of sickness absence during the relevant financial year was not entitled to receive the payment.

Ms Houghton and four colleagues were all disabled pursuant to the criteria set out in the Equality Act 2010. They all had sickness absences but these were attributable to their disabilities. There was no doubt that the Land Registry had made reasonable adjustments to accommodate the employees’ disabilities. Nonetheless they were all issued with formal warnings relating to sickness. Accordingly they were all ineligible for the bonus payments. There was no discretion. Managers could determine that conduct matters would not affect entitlement to the bonus; not so for sickness absence which automatically triggered rejection.

At the employment tribunal the suggestion by the Land Registry that the link between disability and and non-payment of the bonus was too remote was rejected. On the contrary “non-payment of bonus was the consequence, result, effect or outcome of each Claimant’s disability”.

Justification is a possible defence to a claim of discrimination. There was a legitimate aim: encouraging and rewarding good performance and attendance. However the scheme was not a proportionate means of achieving the aim. The Claimants were awarded compensation for injury to feelings and the equivalent of pro-rated bonus payments.

crackdown on bankers? is it really all it’s cracked up to be?

On 30 July and amid much fanfare the Bank of England’s Prudential Regulation Authority announced what is to be “the strictest industry regulation in the world” with a wide range of civil and criminal sanctions available to be applied against defaulting bank employees.

Headlines included a new criminal charge of “reckless mismanagement” which could lead to imprisonment if banks are not run properly. There is also the prospect of recouping bonus payments for up to seven years in respect of those who are found to have been “guilty of misconduct”.

Recoupments are to apply even if the money has been paid and spent.

Although cautiously welcomed by Anthony Jenkins, chief executive of Barclays, the general industry response has been swift and predictably negative. According to the British Bankers Association the new rules will place the UK banking industry at a competitive disadvantage. They have also trotted out the usual claim that City bankers are paid less than in other major financial centres and there might therefore be a dispersal of talent elsewhere.

Are the new rules really so severe? As far as criminal sanctions are concerned, they will require legislation so will first be subject to parliamentary scrutiny. It is likely to be very difficult to pin the criminal burden of proof – guilt beyond all reasonable doubt – on a specific individual or individuals. However, bankers can already be imprisoned and face unlimited fines for “causing a bank to fail” by taking a “reckless decision”. So is this really the “game changer ” that some have suggested?

As for civil penalties, there are obvious employment aspects. Significantly, although it was considered, the rules will not be applied retrospectively. This is no surprise since, to do so, would have the effect of imposing sanctions for breaches not identified as such at the time.

can an employment contract be ended without notice?

It may seem a straightforward question since people are dismissed every working day for what is commonly referred to as “gross misconduct”, i.e. conduct which is so serious that it goes to the root of the contract and renders its continuation undesirable if not impossible.

However, what of the “innocent” employee? In my discussion about decision of the Court of Appeal in Société Générale London Branch v Geys in April 2011 I pointed out that, according to the Court of Appeal, Mr Geys’ employment was terminated on 18 December 2007 when Société Générale made a payment in lieu of notice to him, rather than 4 January 2008 when Société Générale confirmed in writing its intention to do so. The date was very important for Mr Geys because, relying on the earlier date, Société Générale did not have to pay significant bonuses which would have accrued prior to the later termination date.

I commented:

compromise agreements and probably the world’s most expensive lunch

It is an often-heard maxim in contract law that a party cannot seek to claim the benefits of a contract which he has breached. While that is a rather simplistic statement and is, in practice, subject to numerous qualifications and exclusions, the decision of the High Court in Imam-Sadeque -v- Bluebay Asset Management (Services) Limited is an example of how the general principle can apply, even in the most complex of cases.

Heard over seven days and with the judgment of Mr Justice Popplewell running to 235 paragraphs in 61 pages, the case concerned the departure of Mr Imam-Sadeque from Bluebay. As is common with executive contracts there were “good leaver” and “bad leaver” provisions. Resignation would make Mr Imam-Sadeque a “bad leaver”. The distinction was particularly important for him since, as a good leaver, he would be able to exercise share options worth £1.7m. Terms were therefore set out in a compromise agreement.

bonus payments: beware what you say

Managers at Germany’s second largest bank, Commerzbank, are facing the prospect of having to find £42million after Mr Justice Owen, sitting in the High Court in London, held that 104 former City bankers at Dresdner Kleinwort are each entitled to bonus payments of up to £1.3million each.

The Bank claimed to be entitled to withhold payments when it faced massive financial pressure as part of the general turmoil in 2009. In 2008 the business was struggling and in May it was put on the FSA’s "watch list" as a result of the apparent fragility of its business. With a view to avoiding mass defections resulting from the instability this caused CEO Dr Stefan Jentzsch promised at a meeting that there would be a 400 million euros’ guaranteed bonus pot. This was a verbal representation to the employees concerning what was described as a discretionary bonus scheme.

In early 2009 the Bank decided to reduce the resulting allocated bonuses by 90%.