Preparing your data

Question 1

Which pay period to use

Accepted Answer

A pay period is a timeframe in which you pay your relevant employees basic pay.

Most pay periods are a week, a fortnight or a month.

You must use the pay period in which your ‘snapshot date’ falls. The snapshot dates are:

31 March for most public authority employers
5 April for private, voluntary and all other public authority employers

Example:

You are a private limited company, so your snapshot date is 5 April.

You pay your employees monthly, on the 1st of every month.

The pay period to use for your gender pay gap data is 1 April to 30 April.

If employees do not receive basic pay

If an employee receives some other form of ordinary pay instead of basic pay, base their pay period on how you usually pay them.

For example:

if an employee receives pay for piecework only, and you pay them for the number of pieces they create in a week, their pay period is a week
if an employee receives irregular pay every month or in arrears, it may be useful to give them a pay period of up to a year

Question 2

Step 1: Make a list of employees to include and their gender

Accepted Answer

You need to collect data for 2 types of employee:

‘relevant employees’
‘full-pay relevant employees’

Make a list of each type of employee, and keep these lists separate. The payroll data you gather is different for each type of employee.

You will use data on your:

‘relevant employees’ to work out any gender pay gap in bonus pay
‘full-pay relevant employees’ for all other gender pay gap calculations

Relevant employees

Relevant employees are all employees employed on your snapshot date, who either:

have a contract of employment – including employees who are part-time, job-sharing, and on leave
are self-employed, where they must perform the work themselves – that is, they are not permitted to subcontract any part of the work or employ their own staff to do it

Do not include partners who are salaried, or are LLP members who are treated as employees for payroll purposes.

You should count relevant employees on an individual basis, not as full-time equivalents. For example, 2 people sharing a job count as 2 employees.

Full-pay relevant employees

Use your list of relevant employees to create your list of full-pay relevant employees.

Full-pay relevant employees are all employees employed on your snapshot date who are either:

paid their usual full basic pay – including paid leave – or paid for piecework during the pay period in which your snapshot date falls
paid less than their usual basic pay or piecework rate, but not because of leave (for example, because they have irregular working hours)

When to exclude full-pay relevant employees

Do not count anyone as a full-pay relevant employee if they were not paid their usual full basic pay or piecework rate because they were on leave. This includes employees on:

annual leave
maternity, paternity, adoption, parental or shared parental leave
sick leave
special leave
any other forms of leave (for example, study leave or sabbaticals)

Example: full-pay relevant employees

Jalissa, Jenny, Jackie, and Javed all do the same role on the same terms and conditions. They all:

work 5 days a week, and get paid weekly
usually earn £400 basic pay in the relevant pay period.

Jade carries out the same role, but she works 3 days per week, earning £240.

They are all counted as full-pay relevant employees because:

Jalissa worked all week and earned £400
Jenny worked 4 days but took a fifth day as fully-paid special leave to deal with a childcare-related emergency – she earned £400
Jackie was off all week but took paid annual leave, so she still earned £400
Javed worked 3 days and was on strike for 2 days, earning £240 – although he earned less than usual, this does not count as leave
Jade worked all her part-time hours in the relevant pay period

Example: not full-pay relevant employees

Omar and Safiah do the same role on the same terms and conditions. They both:

work 5 days a week, and get paid weekly
would usually earn £400 basic pay in the relevant pay period

Omar and Safiah are not full-pay employees, because:

Omar worked 4 days but took a fifth day as unpaid special leave to attend a funeral and earned £320
Safiah was on maternity leave and received statutory maternity pay, which was less than £400

Omar and Safiah are not full-pay relevant employees because they were both paid less than usual because of leave. They are still counted as ‘relevant employees’.

Recording employees’ gender

It is important for you to be sensitive to how an employee identifies their gender. The gender pay gap regulations do not define the terms ‘men’ and ‘women’.

You should not single out employees and question them about their gender. To reduce the risk of this, try to use information employees have already provided, such as in HR or payroll records.

If this information is unavailable or unreliable, find a way to allow employees to confirm or update their gender. For example, invite them to check their recorded gender and update it if needed.

If an employee does not self-identify as either gender, you can exclude them from your calculations.

Question 3

Step 2: Add ordinary pay

Accepted Answer

In step 1, you created a list of relevant employees, and a list of full-pay relevant employees.

You should now add the amount of ‘ordinary pay’ received by each full-pay relevant employee in the pay period that includes your snapshot date.

Use the employee’s gross pay:

after any reduction for a salary sacrifice scheme
before deductions such as tax, National Insurance and employee pension contributions

You do not need to add ordinary pay for people who are only counted as ‘relevant employees’.

Ordinary pay

Ordinary pay includes any monetary payment, such as:

basic pay
allowances
pay for piecework
pay for leave
shift premium pay

Allowances

You must include all allowances in ordinary pay. In some cases, you will need to decide whether a payment is an allowance or an expense.

You should include:

any allowances your employees would expect to receive in their regular pay
payments called ‘allowances’ that are for core duties (not extra duties)

Examples of allowances include extra amounts for:

fulfilling a role such as fire warden or first aider
working in a particular location – for example, London living allowances
employees abroad, if you can get information from a host employer
buying, leasing or maintaining a vehicle or item – for example, a car allowance
recruiting and retaining an employee – but treat ‘one off’ incentive payments as bonus pay, not an allowance, if you pay them at the start of employment or they are closer to a bonus than an ongoing allowance
being on call

Get professional advice if you need to.

Not included in ordinary pay

Ordinary pay does not include:

overtime pay
allowances earned during paid overtime
redundancy pay
pay related to termination of employment
payments for untaken annual leave
repayments of authorised business expenses – for example, a taxi fare to see a client
benefits in kind – non-cash benefits such as company cars or private medical insurance
interest-free loans, such as season ticket loans

Only include earnings paid in the pay period that includes your snapshot date. Do not include any ordinary pay that you should have paid in a different pay period. This might include a payment to correct a previous accidental underpayment.

Do not include any earnings you have not yet paid, or have already paid, even if you should have paid them in the pay period that includes your snapshot date.

Question 4

Step 3: Add bonus pay

Accepted Answer

In steps 1 and 2, you:

created a list of relevant employees, and a list of full-pay relevant employees
added how much ‘ordinary pay’ you paid to each full-pay relevant employee in the pay period that includes your snapshot date

In step 3a, you will add bonuses paid to each full-pay relevant employee within the pay period that includes your snapshot date.

In step 3b, you will add bonuses paid to all employees in the 12 months ending on your snapshot date. This includes all relevant employees, and full-pay relevant employees.

In both cases, only include bonuses that were actually paid within these periods.

Use the employee’s gross bonus pay:

after any reduction for a salary sacrifice scheme
before deductions such as tax, National Insurance and employee pension contributions

Step 3a: Bonuses paid to full-pay relevant employees

For this part, you will add bonus pay that you paid only:

to full-pay relevant employees
in the pay period which includes your snapshot date

You will use these figures later to work out each employee’s hourly pay.

You should add the full amount of the bonus if:

you paid it to a full-pay relevant employee during a period which is the same as the 12 months to your snapshot date
it is not related to a specific period

If a bonus was for a different time frame to the period which includes your snapshot date, you need to adjust (or ‘prorate’) it. This is so you have a bonus amount for the pay period which includes your snapshot date.

Prorating bonus pay

Divide the bonus amount by the number of days in the period which includes the snapshot date. Then multiply that figure by the number of days in your pay period.

Use the following figures depending on the length of your pay period:

for periods in weeks, treat a year as having 52.18 weeks
for periods in months, treat a month as having 30.44 days
for periods of a year, treat a year as having 365.25 days

Example: Prorating a bonus payment

This is how to calculate a bonus that:

was paid in a pay period which includes your snapshot date
relates to a timeframe that differs from this pay period

Issa is a full-pay relevant employee and:

is paid monthly
received a bonus payment of £2,300 in the pay period which included the snapshot date

The period for which Issa received the bonus was 3 months.

Treat a month as having 30.44 days.

The period for which Issa received the bonus is 3 x 30.44 days, which equals 91.32 days.

Issa’s employer needs to:

divide £2,300 by 91.32 – this gives a figure of £25.19
multiply this figure by 30.44

This gives a result of £766.79 bonus payment for the pay period which includes the employer’s snapshot date.

This example works through the steps and rounds up the figures to the nearest penny. You can choose your own rounding rules.

Step 3b: Bonuses paid to relevant employees

For this part, add bonus pay that you paid:

within the 12 months ending on your snapshot date
to all relevant employees, including full-pay relevant employees

You will use these figures later to work out your gender pay gap in bonus pay.

Do not prorate your bonus figures for this part.

What counts as bonus pay

Bonus pay includes any rewards related to:

profit sharing
productivity
performance
incentive
commission
long service awards with a monetary value (cash, vouchers or securities)

Include non-consolidated (one-off, non-pensionable) bonuses.

Bonus pay includes rewards paid as:

cash
vouchers
securities
securities options
interests in securities

Bonuses used to make pension contributions

If an employee uses a bonus to make pension contributions, treat the bonus as either a deduction or a reduction.

A deduction is when an employee uses their bonus (or part of it) to make a pension contribution. Include the employee’s gross bonus amount before the deduction.

A reduction is when an employee uses a bonus sacrifice scheme to make a pension contribution. Include the employee’s gross bonus amount after the reduction.

Bonuses paid in securities

Bonuses paid in securities are a financial asset intended to gain the employee profit.

Securities include:

shares
bonds
debentures
futures
securities options
interests in securities

Only include bonuses paid in securities if they led to an income tax charge that occurred during the 12 months ending on your snapshot date.

If the income tax charge occurred in the pay period which includes your snapshot date, follow step 3a. If it occurred in the 12 months ending on your snapshot date, follow step 3b.

Do not include securities in bonus pay if:

they do not give rise to a charge to income tax
an employee earns a bonus payment under a long-term incentive plan but defers payment
an employee is part of a share incentive plan of a specific length – only include them as bonus pay if the employee has sold them and received payment

Not included in bonus pay

Do not include:

overtime pay or pay related to overtime pay
redundancy pay
pay related to termination of employment
payments for untaken annual leave
loan schemes provided by the employer
benefits in kind

It may be difficult to distinguish whether all or part of an employee’s bonus pay relates to overtime hours. If it is unclear, you should include it as bonus pay.

Explaining your bonus pay gap

Bonus pay gap calculations include all bonuses paid in the 12 months ending on your snapshot date. They do not take into account how many hours an employee works. If you think there are important factors behind your bonus pay gap, you can highlight them in your supporting narrative.

Question 5

Step 4: Add weekly working hours

Accepted Answer

In steps 1, 2 and 3, you have:

created a list of relevant employees, and a list of full-pay relevant employees
added how much ‘ordinary pay’ you paid (full-pay relevant employees only)
added how much bonus pay you paid

Now add your employees’ weekly working hours. You only need to do this for full-pay relevant employees.

You will use these later to work out their hourly pay.

Do not include paid or unpaid overtime in weekly working hours.

Employees with regular working hours

Employees have ‘regular’ weekly working hours if they have the same contracted hours each week.

Use the hours given in their employment contract, even if they often work extra unpaid hours.

The contract should be effective on the last day of the pay period that includes the snapshot date.

Example: An employee with a minimum number of hours per year

Jacob is a teacher and:

is a full-pay relevant employee on the snapshot date
is required to work at least 1,265 hours over 39 weeks
doesn’t need to have annual leave added, because his paid hours per week are the same for annual leave and work

Jacob’s employer calculates his weekly working hours by dividing 1,265 hours by 39 working weeks.

This makes his basic weekly hours 32 hours and 26 minutes.

Example: An employee with unspecified hours

Gillian is a head teacher at the same school as Jacob and:

is a full-pay relevant employee on the snapshot date
does not have specified working hours, but works about the same amount as Jacob
does not need to have annual leave added, because her paid hours per week are the same for annual leave and work

Gillian’s employer records her basic weekly working hours as 32 hours and 26 minutes. This is so figures for the 2 employees are comparable.

Example: Term-time employees

Claire is a full-pay relevant employee on the snapshot date and:

works 10 hours a week over 39 weeks
gets 5 weeks of annual leave, which she takes outside of the 39 weeks
gets paid in 12 equal monthly instalments, no matter how many hours she works that month

Taking a mean (average) of Claire’s weekly working hours that excludes weeks she didn’t work is unlikely to represent how her pay and work match up.

Instead, her employer:

adds her 39 work weeks and 5 annual leave weeks, which equals 44 paid weeks per year
multiplies this by the 10 hours a week Claire works, which equals 440 paid hours each year
takes a mean (average) of her hours over the year by dividing 440 hours by 52.18 (the exact number of weeks in a year)

This makes Claire’s mean (average) weekly hours around 8.4 hours a week. The method works for other full- and part-time term-time workers too.

Employees with variable working hours

For employees who are not contracted to work the same number of hours each week, you need to work out a mean (average) for them.

To do this:

use the 12 weeks that ends with the last full week of the pay period that includes your snapshot date
take the total number of hours worked by each employee over this period and divide it by 12
do not include any paid or unpaid overtime

If the 12-week period includes a week where the employee did not work at all (for example, due to sickness), replace it with an earlier week where they worked.

If the 12-week period includes a week where they did some work, include this week to work out the mean (average).

If you can’t work out an employee’s 12-week mean (average) – for example, for recent starters – use a number that represents their weekly working hours.

Example: an employee with a variable hours contract

Kathy is a full-pay relevant employee with a variable hours contract. Her employer pays her every week as follows:

basic pay of £7.50 per hour
an evening shift premium of £2 per hour
a productivity allowance of £5 for every 100 items packed

Kathy had a quiet week during the pay period that includes the snapshot date. She worked 25 hours, including one evening shift of 5 hours and packed 400 items.

Her pay during the pay period that includes the snapshot date is:

basic pay of £187.50 (£7.50 x 25 hours)
an evening shift premium of £10 (£2 x 5 hours)
a productivity allowance of £20 (for packing 400 items)
a total payment of £217.50

But Kathy worked on average 40 hours per week over the last 12 weeks.

If her employer used the standard calculation, they would divide £217.50 by 40 hours, giving her an hourly rate of £5.44. This is unrepresentative and lower than even her basic hourly pay rate.

Instead, her employer divides the £217.50 she received in the pay period that includes the snapshot date by the 25 hours she worked that week.

This calculation provides a more representative hourly rate of £8.70.

New employees and changes in role

If you have a new employee who has worked less than 12 weeks in their new role, you should either:

use a figure that represents the number of hours they work in a week
use a mean (average) over a shorter period if you think it represents their working hours

If your new employee has replaced someone with different working hours, use the old and new employees’ hours to create a 12-week mean (average).

If an employee has changed their role, you must take a 12-week mean (average) even if the period covers more than one role.

Example: a full-pay relevant employee with less than 12 weeks employment

Vernilia’s employer has hired her for a new role. It isn’t clear what the normal working hours will end up being, or if there will even be normal hours. For now, her employer has guaranteed her at least 15 hours’ work each week.

By the end of the pay period that includes the snapshot date, Vernillia has worked 150 hours in 6 weeks.

Her employer uses a mean (average) calculation from the 6 weeks she has worked. This equals 25 hours per week.

If Vernillia had taken over a more predictable role from another employee, her employer could have used the previous employee’s mean (average) hours in the calculation.

On-call and sleeping-in arrangements

Include the hours worked by employees who are on-call, awake and available.

Only include the hours worked by employees who have sleeping arrangements as part of their work when they have been called on to work (their ‘waking time’).

Employees paid for piecework

Use the number of hours worked in a week during the pay period as the weekly working hours for employees paid on the basis of piecework.

Question 6

Step 5: Work out your employees’ hourly pay

Accepted Answer

In steps 1 to 4, you have:

created a list of relevant employees, and a list of full-pay relevant employees
added how much ‘ordinary pay’ you paid (full-pay relevant employees only)
added how much bonus pay you paid
added employees’ weekly working hours (full-pay relevant employees only)

Now use this data to work out your employees’ hourly pay.

You only need to do this for full-pay relevant employees.

You do not need to make any special calculations for employees with regular working hours who both:

did not receive any bonuses, allowances, or other variable pay during the pay period that includes your snapshot date
have a fixed hourly rate of basic pay

Add their regular hourly pay to your list.

If employees received bonus pay

You will need to add together each employee’s ordinary pay and bonus pay paid in the pay period.

Before you start, make sure you have adjusted (‘prorated’) any bonus pay that was for a time frame longer than the pay period. See step 3a.

Multiply this by your ‘multiplier’ to find a weekly pay figure. Your multiplier is 7 divided by the number of days in the pay period which includes your snapshot date.