When calculating their gender pay gap, how should employers deal with salary-sacrifice arrangements, benefits in kind and loans to employees?

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI 2017/172) require employers to calculate their gender pay gap based on an hourly rate of pay for each employee. The Regulations state that the definition of "ordinary pay" for these purposes does not include "remuneration provided otherwise than in money".

The guidance published by Acas and the Government Equalities Office Managing gender pay reporting makes clear that this means that the value of benefits provided under a salary-sacrifice arrangement do not count as "ordinary pay". It states that, when making the calculation, "the employer should use the employee's gross pay after any reduction for a salary-sacrifice scheme".

Employers may consider that this distorts their reported gender pay gap, as they may be providing valuable benefits to employees under salary-sacrifice arrangements. In this situation, the employer may choose to explain this in a narrative accompanying its gender pay gap figures.

Similarly, benefits in kind are excluded from the definition of "ordinary pay". This means that an employer should disregard the value of, for example, a company car provided to an employee. However, car allowances should be included in the calculation, as allowances are included in the definition of "ordinary pay".

Where an employer provides an interest-free loan to employees, for example a season ticket loan, the value of the loan should not be included as pay or as a bonus for the purposes of the gender pay gap calculation.