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?

Commission must be included in holiday pay

You may remember some time ago we reported on the groundbreaking decision of the European Court of Justice in Lock v British Gas. The impact of this judgment was significant since this is the case that held that holiday pay should include provision for commission that the employee would have earned had they not been on holiday.

Given the financial implications of this decision to employers nationwide British Gas sought leave to appeal the decision on grounds that the Employment Tribunal should not have followed the Bear Scotland case because that decision was about whether overtime should be incorporated into holiday pay and argued that in doing so the EAT had wrongly interpreted the wording of the Working Time Regulations to conform with the EU Working Time Directive (No. 2003/88) that commission should be included in holiday pay.

The question in this appeal was whether the previous Employment Tribunal was right to insert wording into the Working Time Regulations to allow commission and similar payments to be included in holiday pay calculations. The Employment Appeal Tribunal held that they were, they rejected the appeal and upheld the previous decision that commission payments should be included in the calculation of holiday pay. Mr Justice Singh commented that such an interpretation would not go ‘against the grain’ of the legislation given that Parliament’s purpose in enacting the WTR was to comply with its obligation to fully implement the Directive. The EAT took the view that if the Bear Scotland case was wrongly decided then, that was an issue for the Court of Appeal to rule on.

However, we are not left without difficulty given that the EAT failed to provide any practical considerations or guidance on how the calculation of any holiday pay should be worked out.

holiday pay and commission

Last May I reported the decision of the European Court in Lock v British Gas. It has taken until now for the resulting decision of the employment tribunal in Leicester to be issued.

The judgment itself is unremarkable but its impact is significant since this is the case in which it has been held that holiday pay should include provision for commission that would have been earned had the employee not been on holiday.

Mr Lock was employed from February 2010 by British Gas. His basic pay was £14,670. In addition he was contractually entitled to the benefits of a commission scheme. While on holiday he received only his basic pay. Sales were achieved in the categories of cold calls, hot leads and upgrades. In practice his commission payments greatly exceeded his basic pay. Commissions were based on the sales achieved rather than the amount of work done. He was entitled to 25 days’ holiday per annum plus public and bank holidays, during which time he could not earn commission.

The analysis of the relevant law in the judgment is comprehensive but what matters is how it works in practice following the European Court judgment. The way in which it has been achieved is by adding a new sub-paragraph (e) to Regulation 16(3) of the Working Time Regulations.

last month it was overtime, this month it is commission to be added to holiday pay

In what appears to be an emerging trend to emulate actual regular pay rather than basic pay, the Court of Justice of the European Union (CJEU) has held that holiday pay should include commission if commission forms part of an employee’s remuneration.

Last month I reported that overtime (or its notional equivalent) should be included in holiday pay and that failure to do so could result in significant back pay claims. Applying very similar reasoning the European Court in the case of British Gas v Lock has held that holiday pay should include commission.

Mr Lock was employed by British Gas in 2010 as an internal energy sales consultant. His job entailed persuading business clients to buy energy products. His basic salary was £1222.50 per month. Commission was also paid monthly, based on sales made but with reference to a period some weeks or months earlier (presumably to allow for variations and cancellations).

He was on annual leave from 19 December 2011 to 3 January 2012. His December salary comprised his basic pay of £1222.50 plus commission in relation to earlier weeks amounting to £2350.31. His average monthly commission for 2011 was £1912.67.

During his annual leave he did not make any sales and therefore did not earn any corresponding commission. Logically, that had an adverse impact on his earnings during the month after his annual leave. As a result he brought an employment tribunal claim for what he considered to be the balance of his holiday pay for the period from 19 December to 3 January. This was based on notional commission which he would have earned had he been in work during the period he was on holiday, even though it did not equate to commission earned on actual sales.

In the sort of European judgment which causes understandable irritation to many people, the CJEU held on 22 May that, notwithstanding that Mr Lock received payment of both basic salary and commission during his annual leave, the fact that he lost out on commission in subsequent months because of the holiday should be compensated.