When calculating their gender pay gap, how should employers deal with employees who join or leave part way through the pay period?
Employees who are employed on the snapshot date (5 April each year in the private and voluntary sectors and 31 March in the public sector) must be included in the employer's gender pay gap calculations. Therefore, if an employee joins just before, or leaves just after, the snapshot date, they must still be included, even though they have not worked for the whole of the pay period.
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI 2017/172) set out how employers must calculate the hourly rate of pay for each employee, for the purposes of calculating the gender pay gap. Where an employee has not worked the whole pay period, the employer should calculate an hourly rate of pay based on the employee's normal weekly hours. If the employee does not have normal weekly hours, and has not worked for long enough for the employer to be able to take an average number of hours over 12 weeks, the Regulations allow employers to use a number that "fairly represents the number of working hours in a week" for the employee. When calculating this, the employer should consider what could be expected under the employee's contract and the hours worked by comparable employees.
However, having calculated the employee's weekly hours, the Regulations require the employer to calculate the employee's hourly pay based on what they have actually been paid for working only part of the pay period, rather than what they would normally have been paid over the period. This could lead to a significantly lower hourly rate of pay than what the employee would earn for working a complete pay period.
If an employer's gender pay gap figures are distorted by a number of employees joining or leaving part way through a pay period, the employer could explain this in its narrative. Employers may decide that it would be reasonable to use an hourly rate of pay based on the employee's normal weekly pay and normal weekly hours, but this is not the approach set out under the Regulations.